The history of Chinese currency dates back more than 4,000 years. Evidence from the Neolithic period suggests that items such as shell money—specifically cowrie shells—were used as currency in central China. Later on, the first emperor of China, Qin Shi Huang (260–210 BCE), abolished all local currencies and imposed a uniform copper coin, managed through a treasury-like entity equivalent to a central bank. Before the appearance of the yuan in its formal sense, China had already experimented with paper money during the Five Dynasties period.
Even Marco Polo was astonished by this paper currency, claiming that the emperor could print enough money to buy all the goods in the world at no cost to himself. However, the loss of control through the central bank founded by Möngke Khan triggered inflation and institutional chaos, which contributed to the decline of the Yuan Dynasty, later established by Kublai Khan (a son of Sorghaghtani Beki and Tolui). Traditionally, the introduction of paper money in China is attributed to the Tang Dynasty (618–907).
Although widespread use of this paper money is believed to have occurred later, in the 11th century under the Song Dynasty, there is evidence that early forms of paper currency, known as “jiaozi,” were in use in Sichuan as early as the 8th century. These were more like deposit certificates than modern banknotes, yet they marked the beginning of this concept. The word “yuan” carries the meaning of “essence,” representing the sublimation of the nation—something that goes beyond “renminbi,” which simply means “money.”
For centuries, European merchants used silver coins in China—mostly minted under the Spanish Empire and backed by a central authority—equivalent to the “real de a ocho” (known as the “peso” in Spanish and “dollar” in English). Meanwhile, the expansion of the Mongol Empire—following the triumphs of Genghis Khan and his son Jochi—is credited with establishing printing in the Islamic world (particularly in Samarkand) and later founding a regulatory system of taxation and a central bank in China under Möngke Khan, along with completing the monumental Grand Canal that connects the China Sea with the Yellow River.
Printing in the Islamic world originated even before the era of Genghis Khan and Jochi, with techniques of printing on fabric and later on paper, which saw significant development during the Islamic Golden Age. Nevertheless, the expansion of printing in Samarkand is most often associated with the capture of Chinese papermakers following the Battle of Talas in 751, rather than directly with the Mongol conquests of the 13th century. Still, improvements and dissemination of these techniques in Samarkand—especially regarding paper and ink—were notably advanced.
European merchants traveled to China in the 16th century to buy silk and porcelain, and their Chinese counterparts preferred silver, particularly large European-style coins. By the second half of the 19th century, leading trading nations began issuing their own “trade dollars.” Many different coins were tied to commerce, and various words were used to denote them. One such term was “kuai” (literally “piece”), historically referring to silver or copper coins. Despite China’s invention of paper money, copper coinage remained the base unit for a long time.
These copper coins served as the main currency denomination in China until the introduction of the modern yuan. In 1949, after the end of the Chinese Civil War, the newly established People’s Bank of China introduced the current yuan. The government implemented drastic measures to end the hyperinflation that had plagued the late 1940s. Soon after, a revaluation was carried out in which one new yuan was set to equal 10,000 of the old units.
During the period of a centralized economy, the yuan had a fixed value, and strict currency controls were enforced. On October 1, 2016, the International Monetary Fund (IMF) included the yuan in the basket of currencies that make up Special Drawing Rights (SDRs)—international assets designed to supplement some countries’ official reserves. That basket already included the U.S. dollar, the euro, the Japanese yen, and the British pound sterling. The inclusion of the yuan was a noteworthy event for global monetary policy.
Under Kublai Khan, the Yuan Dynasty issued paper money backed by silver, as well as banknotes supplemented by bronze or copper coins. It is said that Grand Khan Möngke was perhaps the single most powerful monarch in history, with no king, sultan, or emperor able to rival him at the time.
Möngke promoted a pivotal historic moment by organizing the first debate among Christianity, Islam, and Buddhism in Greater Mongolia. His reign established some of the most consistent monetary and administrative policies since Genghis Khan. In commercial matters, he prohibited extravagant spending, limited gifts to princes, subjected merchants to taxes, forbade them from demanding goods or services from civilian populations, and punished unauthorized plundering by generals and princes (including his own son).
In 1253, Möngke created the Department of Monetary Affairs (equivalent to a central bank) to control the issuance of paper money. This new department contributed to economic stability by limiting the overissuance of currency—an issue dating back to Ögedei’s rule—standardizing a measurement system based on silver ingots, and paying off all debts incurred by high-ranking Mongol elites to important foreign and local merchants. Möngke recognized that if he did not honor the financial obligations of his predecessor, Güyük, merchants might refuse to continue doing business with the Mongols.
Like many rulers worldwide at the time, Möngke hoped to capitalize on the burgeoning commercial revolution in Europe and the Middle East. The 13th-century Persian historian Ata-Malik Juvaini praised Möngke’s approach, asking in his writings whether anyone had ever heard of a king paying the debt of another king. The Mongol Empire’s administration echoed trends in Western Europe, where kings and emperors sought more efficient ways to manage their administrative and legal systems to fund crusades, conquests, and wars.
Between 1252 and 1259, Möngke carried out a census of the Mongol Empire, encompassing Iran, Afghanistan, Georgia, Armenia, Russia, Central Asia, and northern China. The census counted not only households but also men aged 15 to 60, as well as fields, livestock, vineyards, and orchards. Möngke also tried to implement a fixed poll tax, collected by imperial agents and then redistributed to units in need. He taxed the wealthiest people most heavily. However, the census and taxation triggered rebellions in the western territories and in more autonomous regions under Mongol influence. These uprisings were ultimately quelled, and Möngke continued his rule.
It is important to note that the vast religious and cultural traditions within these khanates—including Islam, Judaism, Taoism, Orthodoxy, and Buddhism—often clashed with the demands of the Mongol rulers. Some of the most important khanates during Möngke’s administration included:
- The Golden Horde, which encompassed the Rus’ principalities and large areas of what is now Eastern Europe (including Ukraine, Belarus, and Romania). Several Russian princes capitulated to Mongol authority, and a relatively stable alliance existed in some principalities during the 1250s.
- The Chagatai Khanate, a Turkic region initially ruled by Chagatai (one of Genghis Khan’s sons) until his death in 1242. It was clearly Islamic and functioned as a peripheral region of the central Mongol government until 1259, when Möngke passed away.
- The Ilkhanate, a major southwestern khanate of the Mongol Empire that covered parts of present-day Iran, Azerbaijan, Armenia, and Turkey, as well as the cultural heartland of Persia. Möngke’s brother Hulagu governed this region, and his descendants continued to administer it well into the 14th century.