50s: Starting with a storage ring

Chapter 722 Recognition and Trust

The risks of foreign currency exchange can be illustrated with a simple example.

For example, a bank has enabled the free exchange of a small country's currency with the US dollar.

If this small country is crazy enough, it could print a large amount of its own currency in a short period of time to exchange for US dollars, and it could bankrupt the bank that allows the exchange in no time.

To put it bluntly, that bank was exchanging dollars for worthless paper. Whether that worthless paper was valuable or not depended on the country's credit and the underlying asset.

Just like the British pound and the dollar under the Bretton Woods system in the 19th century, when they were anchored to gold.

At that time, US dollars and British pounds could be exchanged for their equivalent value in gold at any time. Therefore, they were valuable and trustworthy.

The dollar is now anchored to oil.

Twelve years ago, America reached the "petrodollar" agreement with OPEC, making the US dollar the sole settlement currency.

From then on, the US dollar was linked to oil. As long as you have US dollars, you can exchange them for oil. Therefore, the US dollar is still the world's universal currency.

The reason why other countries' currencies cannot be used worldwide is because they lack this kind of credit anchored to real goods.

Their monetary value is supported solely by the national credit of the country of issue.

But credibility is sometimes very real, and sometimes very abstract.

If others recognize your credibility, then you have credibility; if others don't recognize it, then you have no credibility at all.

It's like worshipping at a temple; "If you believe, it works; if you don't, it doesn't." It's all about going with the flow, but who can believe that?

Historically, the first foreign bank in China to open up 'foreign exchange' did not launch this business until 96, and even then, the exchange was subject to restrictions.

Before this, our family's money was just a piece of waste paper; foreigners didn't recognize it at all.

At that time, if a country wanted to import goods or equipment from abroad, it had to first export goods to earn foreign exchange before it could use that foreign exchange to buy things abroad.

Why was it that when he was studying in London, he would save even a few dollars of his stipend to send back home?

The family was short of foreign exchange at the time, so they had to pool even the little foreign currency the students had to do big things.

Therefore, the "US dollar exchange" service launched by Cathay Bank's Shenhe branch that year seemed to be an ordinary service offered by every bank.

But behind this business is Cathay Bank's recognition and trust in our currency, and that is what moved the leaders the most.

When Cathay Bank opened up its 'US dollar exchange' business, it was like putting a deadly knife in the hands of the leaders.

Moreover, he even closed his eyes and turned his back on voluntarily. It was this foolish trust that won him the approval of his superiors.

In the eyes of the leaders, everyone else is here to make money in China, and they will eventually part ways.

The management and technical skills we learn in foreign-invested enterprises, as well as the small amount of tax we collect, are just the tip of the iceberg of their profits.

We also need to use this soup and broth to develop the domestic economy.

Cathay Bank, on the other hand, is completely different; it's one of our own.

Therefore, Cathay Bank's business in the domestic market has been smooth sailing and has grown bigger and bigger over the years, without ever being hampered by policies.

At that time, did Cathay's president, Chen Damin, not know the risks involved? Of course he did. However, Sun Zhiwei had already acquired absolute control of Cathay Bank, and Chen could only follow his decisions.

He was simply fulfilling his duty as president by pointing out the risks to Sun Zhiwei.

Of course, Chen Damin also wanted to take a gamble at the time. After all, most of Cathay's shares belonged to Sun Zhiwei. If the major shareholder dared to take a gamble, why shouldn't he?

As it turned out, they actually won their bet.

Cathay Pacific's Shenhe branch is now more profitable than all other Cathay Pacific branches, with its performance far ahead of the competition.

In fact, several informed leaders in China have been speculating about how many shares Sun Zhiwei actually owns in Cathay Bank.

The reason this is speculation is that when he acquired shares from Cathay Pacific's minority shareholders, he used gold in secret transactions and never disclosed it to the public.

Those minority shareholders themselves wouldn't disclose this, because they didn't pay taxes to the IRS after receiving the gold.

Once the news leaks out, at least half of their gold will be confiscated by the IRS.

Because no one is stupid, the news of the shareholding change of Cathay Bank has been kept secret.

Now that the Robert Group has been established, its finance and legal teams have begun to design complex cross-shareholding schemes to conceal Sun Zhiwei's true shareholding ratios in various companies.

Now, when you go to America's tax office to check the shareholder list of the various companies under Sun Zhiwei's name, you will absolutely not see the name 'James Robert'.

All the companies that can be found are "XX Investment", "XX Technology", etc., and all of them are companies holding shares.

Of course, this can also be used to circumvent America's high corporate taxes.

The only company in which James Roberts openly holds a majority stake is the Maria Foundation, and the shareholder is Gabrielle Austin.

However, the Maria Foundation is a charitable foundation, and all donations received by the foundation are tax-free. The IRS does not receive a single penny from the foundation.

Most of the world's conglomerates and established families use this method to avoid taxes.

That's why you don't see the names of those hidden billionaires on the Forbes rich list.

Otherwise, think about it, isn't it strange that you can't see the names of members of old families like Morgan, Rockefeller, and DuPont on the rich list?

If you think that these established tycoons have fallen off the rich list because they have divided the shares of their family businesses equally among more and more of their children, you are really overthinking it.

Sun Zhiwei believes that the Robert family, which he founded, will one day become a member of that family.

At the end of March, Sun Zhiwei departed from Hong Kong Island and took the Gulfstream 3 that came to pick him up back to Subi Island.

Upon returning to Subi Island, he immediately convened a meeting with the island's captains and leaders, where he reported on the results of the search for the missing persons.

Everyone was furious upon learning that one of the two missing soldiers was dead and the other wounded.

Fortunately, Sun Zhiwei then announced the results of his revenge for the two men, which calmed everyone's anger.

After a few days of rest on Subi Island, Sun Zhiwei will continue to finish what he didn't do before the new year: head to Papua Island and ignite the second fire behind Java.

In early April, Sun Zhiwei changed his temporary identity and departed from Singapore, taking an international flight to Darwin in northern Australia.

(End of this chapter)