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date: 24 June 2017

Monetary History of East Asia

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Asian History. Please check back later for the full article.

The monetary history of East Asia is characterized by parallel currency systems in which copper coins played a significant role for everyday transactions, and silver ingots or coins were used for large-scale payments and as currency of account. Gold played a very subordinate role, barring in Japan, where oval gold coins were introduced around 1600. Before the full monetization of the economy, various textiles were used as a means of payment as well as currencies of account. In Japan and Korea, rice also served as a commodity money. The markets in Japan and Korea often used Chinese copper coins, but from c. 700 on (Korea c. 990) they began producing their own, based on the Chinese models with a square central hole and the reign motto in the legend. Copper Cash was traditionally cast, not minted. In the 12th century, paper currency was introduced in larger areas of China, and in Japan, scrip paper notes appeared locally around 1600. From the Ming period on, silver (also in the shape of Mexican Silver Dollars) constituted an important part of the Chinese currency system, due to the large influx of American silver through globalized trade. Modern machine-struck coinage, as well as paper money and the concept of a national bank, came to East Asia in the late 19th century. Unlike the Korean wŏn, the unconvertible Chinese renminbi (yuan) was not affected by the Asian Crisis of 1997, while the currency crisis of the Japanese yen was due to an asset-price bubble. After China’s entry into the World Trade Organization in 2001, the convertibility of the renminbi became the core question of monetary policy, apart from the issue of regulating its exchange rate.