Editing Renminbi (section)

==History==
{{Update|part=images of new issuance of coins and banknotes (see [[:zh:第五套人民币#第三版]])|date=September 2021}}
{{More citations needed section|date=June 2021}}
[[File:China M2 money supply vs USA money supply.png|thumb|260px|right|China M2 [[money supply]] (red) vis-à-vis USA M2 money supply (blue)]]
{{See also|History of Chinese currency}}

The various currencies called [[Chinese yuan|yuan]] or dollar issued in [[mainland China]] as well as [[Taiwan]], [[Hong Kong]], [[Macau]] and [[Singapore]] were all derived from the [[Spanish dollar]],<ref>{{cite book |last=Schäfer |first=Daniel |title=The Silver Way: China, Spanish America and the Birth of Globalisation, 1565–1815 |publisher=Penguin Books |year=2017}}</ref> which China imported in large quantities from [[Spanish America]] from the 16th to 20th centuries. The first locally minted silver dollar or yuan accepted all over [[Qing dynasty]] China (1644–1912) was the [[Silver dragon (coin)|silver dragon dollar]] introduced in 1889.<ref>{{cite book |last=Peng |first=Xinwei |title=A Monetary History of China |publisher=Vol. 2, Western Han to 20th Century, China Financial Publishing House |year=1994}}</ref> Various banknotes denominated in dollars or yuan were also introduced, which were convertible to silver dollars until 1935 when the [[silver standard]] was discontinued and the [[Chinese yuan]] was made ''fabi'' ({{zhi|c=法币}}; legal tender [[fiat currency]]).<ref>{{cite book |last=Von Glahn |first=Richard |title=Fountain of Fortune: Money and Monetary Policy in China, 1000–1700 |publisher=University of California Press |year=1996}}</ref>

The renminbi was introduced by the [[People's Bank of China]] in December 1948,<ref>{{cite web |title=The Development of Renminbi |url=https://www.pbc.gov.cn/en/3688110/3688172/3733012/index.html |access-date=2025-05-07 |publisher=People’s Bank of China}}</ref> about a year before the establishment of the People's Republic of China. It was issued only in paper form at first, and replaced the various currencies circulating in the areas controlled by the [[Chinese Communist Party|Communists]]. One of the first tasks of the new government was to end the [[hyperinflation]] that had plagued China in the final years of the [[Kuomintang]] (KMT) era. That achieved, a revaluation occurred in 1955 at the rate of 1 new yuan = 10,000 old yuan.

In 2019, the People's Bank of China released an updated edition of the fifth series of renminbi banknotes and coins. The update included new versions of the ¥50, ¥20, ¥10, and ¥1 banknotes, as well as the ¥1, ¥0.5, and ¥0.1 coins. These featured improved security features, enhanced printing quality, and brighter coloration to combat counterfeiting and improve recognizability. Notably, the ¥100 banknote from the 2015 issue remained unchanged in this release.<ref>{{cite web |title=The Fifth Series of the Renminbi (2019 edition) |url=https://www.pbc.gov.cn/en/3688110/3688172/3733008/index.html |access-date=2025-05-07 |publisher=People's Bank of China}}</ref>

As the [[Chinese Communist Party]] took control of ever larger territories in the latter part of the [[Chinese Civil War]], its [[People's Bank of China]] began to issue a unified currency in 1948 for use in Communist-controlled territories. Also denominated in ''yuan'', this currency was identified by different names, including "People's Bank of China banknotes" ({{zh|t=中國人民銀行鈔票|s=中国人民银行钞票}}; from November 1948), "New Currency" ({{zh|t=新幣|s=新币|labels=no}}; from December 1948), "People's Bank of China notes" ({{zh|t=中國人民銀行券|s=中国人民银行券|labels=no}}; from January 1949), "People's Notes" (人民券, as an abbreviation of the last name), and finally "People's Currency", or "''renminbi''", from June 1949.<ref name="中华人民共和国第一套人民币概述">{{cite web |url=http://finance.sina.com.cn/money/collection/youbika/20050901/15471935211.shtml |title=中华人民共和国第一套人民币概述 |trans-title=People's Republic of China first RMB Overview |publisher=Sina |location=China |access-date=6 April 2012 |archive-date=24 February 2021 |archive-url=https://web.archive.org/web/20210224134250/http://finance.sina.com.cn/money/collection/youbika/20050901/15471935211.shtml |url-status=live }}</ref><ref>{{cite web |title=Brief History of the Renminbi |url=https://www.pbc.gov.cn/en/3688110/3688172/3733012/index.html |access-date=2025-05-07 |publisher=People's Bank of China}}</ref>

In the early 2020s, China launched the digital renminbi, also known as the digital yuan or e-CNY, a central bank digital currency (CBDC) developed by the People's Bank of China. Pilot programs began in 2020 in cities such as Shenzhen, Suzhou, and Chengdu. By 2023, e-CNY had been integrated into a wide range of applications, including public transportation, government subsidies, retail payments, and cross-border trials. The digital yuan is intended to enhance payment system resilience, offer an alternative to private payment platforms like Alipay and WeChat Pay, and support financial inclusion.<ref>{{cite news |last=Woo |first=Ryan |date=19 January 2023 |title=China's digital yuan trials expand as usage grows |url=https://www.reuters.com/world/china/chinas-digital-yuan-trials-expand-usage-grows-2023-01-19/ |access-date=2025-05-07 |publisher=Reuters}}</ref>

===Era of the command economy===
{{further|Command economy}}
From 1949 until the late 1970s, the state fixed China's exchange rate at a highly overvalued level as part of the country's [[Import substitution industrialization|import-substitution]] strategy. During this time frame, the focus of the state's central planning was to accelerate industrial development and reduce China's dependence on imported manufactured goods. The overvaluation allowed the government to provide imported machinery and equipment to priority industries at a lower domestic currency cost than otherwise would have been possible.<ref>{{Cite web |last=Barmé |first=Geremie |title=Renminbi 人民币 |url=https://www.thechinastory.org/lexicon/renminbi/ |access-date=2025-04-19 |website=The China Story |language=en-AU}}</ref>

===Transition to an equilibrium exchange rate===
{{Unreferenced section|date=November 2024}}
China's transition by the mid-1990s to a system in which the value of its currency was determined by supply and demand in a [[foreign exchange market]] was a gradual process spanning 15 years that involved changes in the official exchange rate, the use of a [[dual exchange rate]] system, and the introduction and gradual expansion of markets for foreign exchange.<ref>{{Cite web |last=Hu |first=Xiaolian |date=2010-07-15 |title=A Managed Floating Exchange Rate Regime is an Established Policy |url=http://www.pbc.gov.cn/english/130724/2881712/index.html |access-date=2025-04-19 |website=The People's Bank of China}}</ref>

The most important move to a market-oriented exchange rate was an easing of controls on trade and other current account transactions, as occurred in several very early steps. In 1979, the [[State Council of the People's Republic of China|State Council]] approved a system allowing exporters and their provincial and local government owners to retain a share of their foreign exchange earnings, referred to as foreign exchange quotas. At the same time, the government introduced measures to allow retention of part of the foreign exchange earnings from non-trade sources, such as overseas remittances, port fees paid by foreign vessels, and tourism.<ref>{{Cite web |title=Pan Gongsheng: China's Foreign Exchange Administration Reform over the Past Seven Decades |url=https://www.safe.gov.cn/en/2019/0930/1574.html |access-date=2025-04-19 |website=State Administration of Foreign Exchange}}</ref>

As early as October 1980, exporting firms that retained foreign exchange above their own import needs were allowed to sell the excess through the state agency responsible for the management of China's exchange controls and its foreign exchange reserves, the State Administration of Exchange Control. Beginning in the mid-1980s, the government sanctioned foreign exchange markets, known as swap centres, eventually in most large cities.{{cn|date=November 2024}}

The government also gradually allowed market forces to take the dominant role by introducing an "internal settlement rate" of ¥2.8 to 1 US dollar which was a devaluation of almost 100%.<ref>{{Cite web |date=1983-03-09 |title=Report and Recommendation of the President of the International Bank for Reconstruction and Development to the Executive Directors on a Proposed Loan in an Amount Equivalent to $100.8 Million to the People's Republic of China for the Zhongyuan-Wenliu Petroleum Project |url=https://documents1.worldbank.org/curated/en/258511468243257917/pdf/multi-page.pdf |access-date=2025-04-19 |website=The World Bank}}</ref>

===Foreign exchange certificates, 1980–1994===
In the process of opening up China to external trade and tourism, transactions with foreign visitors between 1980 and 1994 were done primarily using [[foreign exchange certificate]]s ({{zhi|c=外汇券|p=waihuiquan}}) issued by the [[Bank of China]].<ref>{{Cite web|url=https://www.bis-ans-ende-der-welt.net/China-X-B-En.htm|title=Banknotes • China • Heiko Otto|access-date=5 March 2022|archive-date=23 August 2019|archive-url=https://web.archive.org/web/20190823064128/https://www.bis-ans-ende-der-welt.net/China-X-B-En.htm|url-status=live}}</ref><ref>{{cite web |url=http://www.asianlii.org/cn/legis/cen/laws/protbocofec624/ |title=Provisional Regulations Of The Bank Of China Of Foreign Exchange Certificate |publisher=Asianlii.org |date=1980-03-19 |access-date=2022-03-15 |archive-date=5 March 2022 |archive-url=https://web.archive.org/web/20220305053042/http://www.asianlii.org/cn/legis/cen/laws/protbocofec624/ |url-status=live }}</ref><ref>{{cite web |url=https://www.bankofchina.com/en/aboutboc/ab7/200809/t20080926_1601850.html |title=Foreign Exchange Certificates Issued under Improved Forex Administration (1979–1989) |publisher=Bankofchina.com |date=1980-04-01 |access-date=2022-03-15 |archive-date=5 March 2022 |archive-url=https://web.archive.org/web/20220305054044/https://www.bankofchina.com/en/aboutboc/ab7/200809/t20080926_1601850.html |url-status=live }}</ref> Foreign currencies were exchangeable for FECs and vice versa at the renminbi's prevailing official rate which ranged from US$1 = ¥2.8&nbsp;FEC to ¥5.5&nbsp;FEC. The FEC was issued as banknotes from ¥0.1 to ¥100, and was officially at par with the renminbi. Tourists used FECs to pay for accommodation as well as tourist and luxury goods sold in [[Friendship Store]]s. However, given the non-availability of foreign exchange and Friendship Store goods to the general public, as well as the inability of tourists to use FECs at local businesses, an illegal [[black market]] developed for FECs where touts approached tourists outside hotels and offered over ¥1.30&nbsp;RMB in exchange for ¥1&nbsp;FEC.<ref>{{Cite web |title=Changing Times -- china.org.cn |url=http://www.china.org.cn/books&magazines/2008-11/13/content_16760802.htm |access-date=2025-05-07 |website=www.china.org.cn}}</ref> 

===Evolution of exchange policy since 1994===
In November 1993, the Third Plenum of the 14th Central Committee of the Chinese Communist Party approved a comprehensive reform strategy in which foreign exchange management reforms were highlighted as a key element for a market-oriented economy. A floating exchange rate regime and convertibility for renminbi were seen as the ultimate goal of the reform. Conditional convertibility under current account was achieved by allowing firms to surrender their foreign exchange earning from current account transactions and purchase foreign exchange as needed. Restrictions on [[Foreign direct investment in China|Foreign Direct Investment]] (FDI) was also loosened and capital inflows to China surged.<ref>{{Cite journal |title=China: the evolution of foreign exchange controls and the consequences of capital flows |url=https://www.bis.org/publ/bppdf/bispap44h.pdf |journal=BIS Papers |publisher=People’s Bank of China |volume=44}}</ref>

===Convertibility===
During the era of the [[command economy]], the value of the renminbi was set to unrealistic values in exchange with Western currency and severe currency exchange rules were put in place, hence the dual-track currency system from 1980 to 1994 with the renminbi usable only domestically, and with [[Foreign Exchange Certificate]]s (FECs) used by foreign visitors.{{cn|date=November 2024}}

In the late 1980s and early 1990s, China worked to make the renminbi more convertible. Through the use of swap centres, the exchange rate was eventually brought to more realistic levels of above ¥8/US$1 in 1994 and the FEC was discontinued. It stayed above ¥8/$1 until 2005 when the renminbi's peg to the dollar was loosened and it was allowed to appreciate.{{cn|date=November 2024}}

As of 2013, the renminbi is convertible on [[Current account (balance of payments)|current account]]s but not [[capital account]]s. The ultimate goal has been to make the renminbi fully convertible. However, partly in response to the [[Asian financial crisis]] in 1998, China has been concerned that the Chinese financial system would not be able to handle the potential rapid cross-border movements of [[hot money]], and as a result, as of 2012, the currency trades within a narrow band specified by the Chinese central government.{{cn|date=November 2024}}

Following the [[internationalization of the renminbi]], on 30 November 2015, the [[International Monetary Fund|IMF]] voted to designate the renminbi as one of several main world currencies, thus including it in the basket of [[special drawing rights]]. The renminbi became the first emerging market currency to be included in the IMF's SDR basket on 1 October 2016.<ref name="Solomon Teague"/> The other main world currencies are the [[United States dollar|dollar]], the [[euro]], [[Pound sterling|sterling]], and the [[Japanese yen|yen]].<ref>{{cite news | first=Keith | last=Bradsher | title=China's Renminbi Is Approved by I.M.F. as a Main World Currency | url=https://www.nytimes.com/2015/12/01/business/international/china-renminbi-reserve-currency.html?emc=dlbkpm&emc=edit_dlbkpm_20151130&nl=%3Fnl%3Ddlbk&nlid=64450146&_r=0 | newspaper=NY Times | date=30 November 2015 | access-date=30 November 2015 | archive-date=23 April 2021 | archive-url=https://web.archive.org/web/20210423003710/https://www.nytimes.com/2015/12/01/business/international/china-renminbi-reserve-currency.html?emc=dlbkpm&emc=edit_dlbkpm_20151130&nl=%3Fnl%3Ddlbk&nlid=64450146&_r=0 | url-status=live }}</ref>

=== Digital renminbi ===
{{Main|Digital renminbi}}
In October 2019, China's central bank, [[People's Bank of China|PBOC]], announced that a [[digital renminbi]] was going to be released after years of preparation.<ref name=nikkeiasia-20191231>{{cite news |url=https://asia.nikkei.com/Business/Markets/Currencies/China-s-digital-yuan-takes-shape-with-new-encryption-law |title=China's digital yuan takes shape with new encryption law |last=Tabeta |first=Shunsuke |website=Nikkei Asia |date=31 December 2019 |access-date=11 October 2020 |archive-date=14 December 2021 |archive-url=https://web.archive.org/web/20211214112746/https://asia.nikkei.com/Business/Markets/Currencies/China-s-digital-yuan-takes-shape-with-new-encryption-law |url-status=live }}</ref> This version of the currency, also called DCEP (Digital Currency Electronic Payment),<ref>{{cite web|url=https://www.hkma.gov.hk/eng/news-and-media/press-releases/2019/11/20191106-3/|title=Hong Kong Monetary Authority – Hong Kong FinTech Week 2019|last=Authority|first=Hong Kong Monetary|website=Hong Kong Monetary Authority|language=en|access-date=10 November 2019|archive-date=5 December 2021|archive-url=https://web.archive.org/web/20211205212717/https://www.hkma.gov.hk/eng/news-and-media/press-releases/2019/11/20191106-3/|url-status=live}}</ref> can be "decoupled" from the banking system to give visiting tourists a taste of the nation's burgeoning [[cashless society]].<ref>{{cite web|url=https://www.scmp.com/business/banking-finance/article/3036543/chinas-digital-currency-tsar-says-e-payment-platforms-may|title=Digital yuan tsar gives green light for tourists to go cashless in China|date=6 November 2019|website=South China Morning Post|language=en|access-date=10 November 2019|archive-date=5 December 2021|archive-url=https://web.archive.org/web/20211205231544/https://www.scmp.com/business/banking-finance/article/3036543/chinas-digital-currency-tsar-says-e-payment-platforms-may|url-status=live}}</ref>  The announcement received a variety of responses: some believe it is more about domestic control and surveillance.<ref>{{Cite news|url=https://www.reuters.com/article/us-china-markets-digital-currency-idUSKBN1XB3QP|title=China's proposed digital currency more about policing than progress|date=1 November 2019|work=Reuters|access-date=10 November 2019|language=en|archive-date=5 December 2021|archive-url=https://web.archive.org/web/20211205231509/https://www.reuters.com/article/us-china-markets-digital-currency-idUSKBN1XB3QP|url-status=live}}</ref> Some argue that the real barriers to internationalisation of the renminbi are China's capital controls, which it has no plans to remove. Maximilian Kärnfelt, an expert at the [[Mercator Institute for China Studies]], said that a digital renminbi "would not banish many of the problems holding the renminbi back from more use globally". He went on to say, "Much of China's financial market is still not open to foreigners and [[property right]]s remain fragile."<ref name="ft.c_Virtual_control">{{cite web |title=Virtual control: the agenda behind China's new digital currency |last1=Kynge |first1=James |last2=Yu |first2=Sun |newspaper=[[Financial Times]] |date=16 February 2021 |access-date=20 February 2021 |url= https://www.ft.com/content/7511809e-827e-4526-81ad-ae83f405f623 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/7511809e-827e-4526-81ad-ae83f405f623 |archive-date=10 December 2022 |url-access=subscription}}</ref>

The PBOC has filed more than 80 patents surrounding the integration of a [[digital currency]] system, choosing to embrace the [[blockchain]] technology. The patents reveal the extent of China's digital currency plans. The patents, seen and verified by the ''[[Financial Times]]'', include proposals related to the issuance and supply of a central bank digital currency, a system for interbank settlements that uses the currency, and the integration of digital currency wallets into existing retail bank accounts. Several of the 84 patents reviewed by the ''Financial Times'' indicate that China may plan to [[algorithm]]ically adjust the supply of a central bank digital currency based on certain triggers, such as loan [[interest rate]]s. Other patents are focused on building digital currency [[Smart card|chip cards]] or digital currency wallets that banking consumers could potentially use, which would be linked directly to their bank accounts. The patent filings also point to the proposed '[[tokenomics]]' being considered by the DCEP working group. Some patents show plans towards programmed inflation control mechanisms. While the majority of the patents are attributed to the PBOC's Digital Currency Research Institute, some are attributed to state-owned corporations or subsidiaries of the Chinese central government.<ref name=ft-20200212>{{cite news |url=https://www.ft.com/content/f10e94cc-4d74-11ea-95a0-43d18ec715f5 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/f10e94cc-4d74-11ea-95a0-43d18ec715f5 |archive-date=10 December 2022 |url-status=live |title=Patents reveal extent of China's digital currency plans |author1=Hannah Murphy |author2=Yuan Yang |newspaper=Financial Times |url-access=subscription |date=12 February 2020 |access-date=3 May 2020}}</ref>

Uncovered by the [[Chamber of Digital Commerce]] (an American non-profit advocacy group), their contents shed light on Beijing's mounting efforts to digitise the renminbi, which has sparked alarm in the West and spurred central bankers around the world to begin exploring similar projects.<ref name=ft-20200212/> Some commentators have said that the U.S., which has no current plans to issue a government-backed digital currency, risks falling behind China and risking its dominance in the global financial system.<ref>{{cite web|date=17 March 2021|title=Is the US worried it is falling behind China's digital currency?|url=https://www.scmp.com/economy/china-economy/article/3125658/china-digital-currency-us-worried-it-falls-behind-curve-race|access-date=9 April 2021|website=South China Morning Post|language=en|archive-date=24 December 2021|archive-url=https://web.archive.org/web/20211224205538/https://www.scmp.com/economy/china-economy/article/3125658/china-digital-currency-us-worried-it-falls-behind-curve-race|url-status=live}}</ref> [[Victor Shih]], a China expert and professor at the [[University of California San Diego]], said that merely introducing a digital currency "doesn't solve the problem that some people holding renminbi offshore will want to sell that renminbi and exchange it for the dollar", as the dollar is considered to be a safer asset.<ref name="qz.c_Why_China's">{{cite web |title=The same problems plaguing the yuan will plague China's digital currency |last=Hui |first=Mary |publisher=[[Quartz (publication)|Quartz]] |date=10 September 2020 |access-date=11 April 2021 |url=https://qz.com/1899402/why-chinas-digital-yuan-wont-internationalize-the-renminbi/ |archive-date=10 November 2021 |archive-url=https://web.archive.org/web/20211110233132/https://qz.com/1899402/why-chinas-digital-yuan-wont-internationalize-the-renminbi/ |url-status=live }}</ref> [[Eswar Prasad]], an economics professor at [[Cornell University]], said that the digital renminbi "will hardly put a dent in the dollar's status as the dominant global reserve currency" due to the United States' "economic dominance, deep and liquid capital markets, and still-robust institutional framework".<ref name="qz.c_Why_China's"/><ref name="proj_China's_Digital">{{cite web |title=China's Digital Currency Will Rise but Not Rule |last=Prasad |first=Eswar |publisher=[[Project Syndicate]] |date=25 August 2020 |access-date=11 April 2021 |url=https://www.project-syndicate.org/commentary/china-digital-currency-will-not-threaten-dollar-by-eswar-prasad-2020-08 |archive-date=14 September 2020 |archive-url=https://web.archive.org/web/20200914045004/https://www.project-syndicate.org/commentary/china-digital-currency-will-not-threaten-dollar-by-eswar-prasad-2020-08 |url-status=live }}</ref> The U.S. dollar's share as a [[reserve currency]] is above 60%, while that of the renminbi is about 2%.<ref name="qz.c_Why_China's"/>

In April 2020, ''[[The Guardian]]'' reported that the digital currency [[e-RMB]] had been adopted into multiple cities' monetary systems and "some government employees and [[public servants]] [will] receive their salaries in the digital currency from May. ''The Guardian'' quoted a ''[[China Daily]]'' report which stated "A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level. It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption."<ref name=guardian-20200428>{{cite news |url=https://www.theguardian.com/world/2020/apr/28/china-starts-major-trial-of-state-run-digital-currency |title=China starts major trial of state-run digital currency |first=Helen |last=Davidson |newspaper=The Guardian |date=28 April 2020 |access-date=3 May 2020 |archive-date=17 December 2021 |archive-url=https://web.archive.org/web/20211217233146/https://www.theguardian.com/world/2020/apr/28/china-starts-major-trial-of-state-run-digital-currency |url-status=live }}</ref> There were talks of testing out the digital renminbi in the [[2022 Winter Olympics|Beijing Winter Olympics]] in 2022, but China's overall timetable for rolling out the digital currency was unclear.<ref>{{cite web|date=2 June 2020|title=What is China's new digital currency all about?|url=https://www.kitco.com/news/2020-06-02/What-is-China-s-new-digital-currency-all-about.html|access-date=3 June 2020|website=Kitco News|archive-date=9 March 2021|archive-url=https://web.archive.org/web/20210309090219/https://www.kitco.com/news/2020-06-02/What-is-China-s-new-digital-currency-all-about.html|url-status=live}}</ref>

=== Interest rate and green bonds ===
In May 2023, RMB interest rate swaps was launched.<ref name=":0">{{Cite web |title=Hong Kong: HKD-RMB Dual Counter Model in Hong Kong's stock market {{!}} IF |url=https://www.iflr1000.com/NewsAndAnalysis/Hong-Kong-HKD-RMB-Dual-Counter-Model-in-Hong-Kongs-stock-market/Index/14147 |access-date=2023-07-19 |website=www.iflr1000.com}}</ref> In June 2023, under the Government Green Bond Programme, the [[Government of the Hong Kong Special Administrative Region|Government of the Hong Kong Special Administrative Region of the People's Republic of China]] (HKSAR) announced a green bonds offering, of approximately US$6 billion denominated in [[USD]], [[Euro|EUR]] and RMB.<ref name=":0" /><ref>{{Cite web |author=Hong Kong Monetary Authority|title=Hong Kong Monetary Authority - HKSAR Government's Institutional Green Bonds Offering |url=https://www.hkma.gov.hk/eng/news-and-media/press-releases/2023/06/20230601-5/ |access-date=2023-07-19|language=en}}</ref>