The Rise and Fall of Paper Money in Yuan China, 1260-1368

Hanhui Guan, Nuno Palma and Meng Wu

Economics Discussion Paper Series from Economics, The University of Manchester

Abstract: Following the Mongol invasion of China, the Yuan (1260–1368) dynasty was the first political regime in history able to deploy paper money as the sole legal tender. Drawing on a new dataset on money issues, imperial grants, and prices, we show that a silver standard initially consolidated the Chinese currency market. However, persistent fiscal pressures eventually compelled rulers to ease the monetary standard, and a fiat standard was adopted, leading to inflation levels which doubled the price level in less than a decade. We show that military pressure generated fiscal demands which led to over-issuance, and we reject the role of excessive imperial grants in triggering the over-issue of money.

Keywords: Paper money; silver standard; fiat money; Yuan China (search for similar items in EconPapers)
JEL-codes: E42 N15 N45 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-cna, nep-his, nep-mon and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:man:sespap:2207

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