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The rise and fall of paper money in Yuan China, 1260–1368
In early-13th century China, the Mongols introduced the silver standard, the first paper money in history to be backed by a precious metal. This column studies the rise and fall of paper money in 13-14th century China over three stages: full silver convertibility, nominal silver convertibility, and fiat standard. Military pressure in particular led to the over-issuance of money, especially under the fiat standard. Eventually, over-issuance led to high inflation as the dynasty collapsed. China’s historical experience underscores that economic prosperity hinges on the effective execution of sound policies, a process influenced by the political landscape.China’s economic performance over recent years has raised global concerns. Compared to its past four decades of miraculous growth, the country is now facing an economic slowdown. A property market crisis, stock market slump, consumer price fall, and currency depreciation have triggered anxiety about whether the world’s second-largest economy is entering a recession. The uncertainty about the country’s future also prompts Chinese policymakers to recalibrate some of its policies and seek new sources for growth (De Soyres and Moore 2024). In a recent talk, President Xi emphasised high-quality financial development. According to Xi, an array of elements will accelerate the construction of a modern financial system with Chinese characteristics: a strong currency, a strong central bank, strong financial institutions, strong international financial centres, strong financial regulation, and a strong financial talent pool (Xinhua 2024).
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The rise and fall of paper money in Yuan China, 1260–1368
In early-13th century China, the Mongols introduced the silver standard, the first paper money in history to be backed by a precious metal. This column studies the rise and fall of paper money in 13-14th century China over three stages: full silver convertibility, nominal silver convertibility...
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