This imbalance led to a flow of silver from rural areas to smaller cities and eventually into larger urban centers, which then faced an excess of capital.
As countries like Britain and Japan abandoned the gold standard and enacted competitive devaluations to establish trade barriers, global silver prices began to rise.
The Nationalist government only began restricting foreign exchange speculation in September 1934, and in October, imposed export duties on silver and trade balance taxes.
However, the U.S. opposed Britain's plan to peg the new currency to the British pound, and Leith-Ross’s subsequent visit to Japan was met with a lukewarm reception.
That same year, Soong, Du Yuesheng, and Tang Shoumin joined the board of the Shanghai Bankers' Association, taking over leadership from the Jiangsu-Zhejiang clique.
By 1936, they had secured control over the association’s leading banks, which held the majority of assets among its members, marking the end of Shanghai's financial independence from the government.
By late October, the Ministry of Finance had abandoned hopes for British aid and was prepared to proceed with the reform without external assistance.
The urgency of the domestic economic crisis, compounded by Japanese aggression and the need to maintain governance, made the currency reform imperative.
To allay public concerns, the Ministry of Finance stated that the centralised reserves would prevent bank runs, strengthen currency issuance, enhance the financial sector's resilience, and ensure that the fabi remained backed by silver, thus safeguarding against inflation.
The British representative, Sir Frederick Leith-Ross, told American officials that he was not directing China's reforms but acknowledged that the Chinese plan was generally sound.
On 6 November, Japan's Ministry of Foreign Affairs issued a protest to Chinese diplomats, arguing that China had secured British backing for the reform, aligning with the U.K. and the U.S. at the expense of Japanese interests and Sino-Japanese relations.
It argued that the Nationalist government lacked the trust of its people, predicting that the CNC would soon be worthless, and claimed that the reform undermined peace in East Asia and was a self-destructive move.
[13] Due to the hostility with Japan, the U.S. ultimately agreed to China's request for assistance, which included selling a substantial amount of American silver in exchange for foreign currency.