China’S 8 Centuries Of Experiment Amongst Newspaper Coin Is Coming To A Closed

And speaking of the Ming Dynasty (Monday's "Thinking About President Xi together with Prince Kanenaga"), a repost from June 4, 2018.

From 15MB, Feb 9:

The Chinese were starting fourth dimension alongside the smashing transition from commodity money to paper money. They had the necessary technologies (you can’t direct maintain newspaper money without newspaper together with you lot can’t practise it at scale without printing) and, to a greater extent than importantly, they had the bureaucracy. In 1260, the novel Emporer Kublai Khan  determined that it was a burden on commerce together with drag on taxation to direct maintain all sorts of currencies inward use, ranging from copper coins to Fe bars, to pearls to tabular array salt to gilded together with silver, thus he decided to implement a novel currency. The Khan decided to supervene upon metal, commodities, precious jewels together with specie alongside a newspaper currency. H5N1 newspaper currency! Imagine how crazy that must direct maintain sounded! Replacing actual materials alongside plainly worthless paper! It’ll never work!

Crazy or not, it worked together with exactly as Marco Polo together with other medieval travellers returned along the Silk Road breathless alongside astonishing tales of newspaper money, thus modern commentators (e.g., me) are tumbling off of flights from Shanghai alongside as astonishing tales of a terra firma of mobile payments, where newspaper money is vanishing together with consumers pay for everything alongside smartphones. Red People's Republic of China is good on the way to becoming a cashless society, alongside the destination of newspaper money inward sight. Something similar one-seventh of China’s population relies on mobile payments to larn around, carrying no cash, according to a survey conducted yesteryear Renmin University of China. The natural footstep from in that location is to practise digital currency thus that short town is inward key banking concern money together with in that location are no credit risks.

This thinking has been evolving for some time. Back inward 2016, the Governor of the People’s Bank of China (PBOC), Zhou Xiaochuan, ready out the Bank’s thinking about digital currency, maxim that it is an irresistible tendency that newspaper money volition go replaced yesteryear novel products together with novel technologies. He went on to order that as a legal tender, digital currency should go controlled yesteryear the key banking concern together with subsequently noting that he idea it would direct maintain a decade or thus for digital currency to completely supervene upon cash inward China, he went to terra firma clearly that the banking concern was working out “how to gradually stage out newspaper money”. Rather than exactly allow the cashless gild happen, which may non led to the optimum implementation for society, they were developing a excogitation for a cashless society.

As I direct maintain written before, I don’t think a “cashless society” agency a gild inward which notes together with coins are outlawed, but a gild inward which they are irrelevant. Under this Definition the PBOC could easily hit this goal for China. But should they practise this? Yao Qian, from the PBOC technology subdivision wrote on the bailiwick inward 2017, maxim that to “offset the shock” to commercial banks that would come upwards from introducing an independent digital currency organization (and to protect the investment made yesteryear commercial banks on infrastructure), it would go possible to “incorporate digital currency wallet attributes into the existing commercial banking concern delineate concern human relationship system” thus that electronic currency together with digital currency are managed nether the same account.

This rationale is clear and, well, rational. The Chinese key banking concern wants the efficiencies that come upwards from having a digital currency but too understands the implications of removing the exorbitant privilege of money creation from the commercial banks. If the commercial banks cannot practise money yesteryear creating credit, thus they tin alone supply loans from their deposits. Imagine if Bitcoin were the alone currency inward the world: I’d nevertheless quest to borrow a few of them to purchase a novel car, but since Barclays can’t practise Bitcoins they tin alone lend me Bitcoins that they direct maintain taken inward deposit from other people. Fair enough. But here, as inward thus many other things, China is a window into the future, because Alipay, WeChat Wallet together with other Chinese 3rd political party payment platforms purpose fiscal incentives to encourage users to direct maintain money out of their banking concern accounts together with shop it on their platforms. If commercial banks cannot fund loans from deposits, nosotros are inward a novel place, economically speaking....MORE

Previously:
January 2016
More On China's Cryptocurrency Push together with Financial Repression

September 2007
Chinese inflation hits 6.5 percent, highest charge per unit of measurement inward nearly eleven years

...If I remember correctly, the Ming Dynasty had to repudiate newspaper money inward the 1450's to destination a hyperinflation.

Update: I am pleased alongside myself.
Found this quote from "A History of Money":

1448	Hyperinflation inward China
The Ming banking concern complaint nominally worth 1,000 cash has a marketplace position value of alone three. p 183

Here's the Hyperinflator:


Ying Zong, Zhu Qizhen, 1436 - 1450 together with 1457 - 1464,
Emperor Ming Dynasty