Chines Yuan (the first fiat currency)

The Chinese yuan (CNY), also known as the renminbi (RMB) is one of the earliest fiat currencies and was an early choice for burning for this reason.

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Even including cowry shells, metal ingots, and bronze coins. As early as the 7th century BCE, the Chinese began using metal coins, with the famous Qin dynasty in the 3rd century BCE standardizing coinage in China. These coins were typically made of bronze and shaped like spades or knives. As Chinese civilization progressed, especially during the Tang Dynasty (618–907 CE) and the Song Dynasty (960–1279 CE), the use of paper money began to emerge. The Chinese government during the Song Dynasty was the first in the world to issue paper money on a large scale.

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The Song Dynasty is often credited with introducing the world's first fiat currency. During the 11th century, the government began issuing jiaochao — a form of paper currency. Unlike previous forms of money, such as coinage or metal ingots, jiaochao was not backed by any tangible commodity like gold or silver. Instead, it was backed by the government's promise to accept it for payment of taxes and other obligations. I'm very interested in obtaining and burning certified antique paper currency from the Yuan Dynasty period. Please see the Proposals page if you're interested in sponsoring or collaborating on a project that requires acquisition.

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The issuance of jiaochao was revolutionary in that it marked a shift from commodity money (which had intrinsic value) to fiat money (whose value was based on the trust in the issuing authority). This made the jiaochao one of the earliest examples of fiat currency in the world. However, over time, the over-issuance of paper money led to inflation and the eventual collapse of the system. This cycle of inflation and devaluation would occur multiple times throughout China's history, but the introduction of paper money was an important step in the evolution of modern currency systems.

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The name "yuan" itself comes from the Yuan Dynasty (1271–1368), which was established by Kublai Khan, a grandson of Genghis Khan. During this period, the Yuan Dynasty issued a new form of paper currency known as "jiaochao" or "jiaochao qián". This was one of the earliest attempts to establish a national paper currency in China, and it was, like the earlier forms of paper money, not backed by any precious metals. The yuan as a currency would be used in China for centuries, and the word "yuan" would become synonymous with "money" in China. Today, the renminbi (RMB), the official currency of the People's Republic of China, is often colloquially referred to as the yuan.

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This is how the Italian explorer Marco Polo described the world's first fiat currency under Kublai Kahn. ""With these pieces of paper, made as I have described, he [Khubilai Khan] causes all payments on his own account to be made; and he makes them to pass current universally over all his kingdoms and provinces and territories, and whithersoever his power and sovereignty extends. And nobody, however important he may think himself, dares to refuse them on pain of death. And indeed everybody takes them readily, for wheresoever a person may go throughout the Great Kaan’s dominions he shall find these pieces of paper current, and shall be able to transact all sales and purchases of goods by means of them just as well as if they were coins of pure gold. And all the while they are so light that ten bezants’ worth does not weigh one golden bezant."

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Furthermore all merchants arriving from India or other countries, and bringing with them gold or silver or gems and pearls, are prohibited from selling to any one but the Emperor. He has twelve experts chosen for this business, men of shrewdness and experience in such affairs; these appraise the articles, and the Emperor then pays a liberal price for them in those pieces of paper. The merchants accept his price readily, for in the first place they would not get so good a one from anybody else, and secondly they are paid without any delay. And with this paper-money they can buy what they like anywhere over the Empire, whilst it is also vastly lighter to carry about on their journeys. And it is a truth that the merchants will several times in the year bring wares to the amount of 400,000 bezants, and the Grand Sire pays for all in that paper. So he buys such a quantity of those precious things every year that his treasure is endless, whilst all the time the money he pays away costs him nothing at all. Moreover, several times in the year proclamation is made through the city that anyone who may have gold or silver or gems or pearls, by taking them to the Mint shall get a handsome price for them. And the owners are glad to do this, because they would find no other purchaser give so large a price. Thus the quantity they bring in is marvelous, though these who do not choose to do so may let it alone. Still, in this way, nearly all the valuables in the country come into the Kaan’s possession."

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 In 1948, the People’s Bank of China (PBOC) began issuing the renminbi (RMB) as the official currency of the newly founded People’s Republic of China, replacing the Chinese dollar (used during the Republic of China era). The renminbi (meaning "people's currency") was initially issued in banknotes, and its primary unit is the yuan. Although the yuan is technically a unit of the renminbi, the terms are often used interchangeably in casual conversation.

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As with earlier Chinese paper currencies, the renminbi is fiat money — it is not backed by any physical commodity like gold or silver, but rather derives its value from the confidence and authority of the government. The PBOC controls the issuance of currency and manages its value, including through mechanisms like exchange rate policies and interest rates. The Global Role of the Yuan Today In recent decades, the yuan has increasingly gained importance on the global stage. Since China's economic rise in the late 20th century, the yuan has become one of the most actively traded currencies in the world. Although it is not yet fully convertible on international markets, the yuan's role in global trade and finance has expanded significantly.

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In 2016, the International Monetary Fund (IMF) included the yuan in its Special Drawing Rights (SDR) basket, marking the currency's official recognition as a global reserve currency. This was a significant milestone, as the yuan became the first non-Western currency to join the SDR basket, which had been dominated by the U.S. dollar, the euro, the British pound, and the Japanese yen.