Japanese currency
Encyclopedia
Japanese currency has a history covering the period from the 8th century to the present. After the traditional usage of rice as currency medium, Japan's currency was characterized by an early adoption of currency systems and designs from mainland China
, before developing into an original system of its own.
for its exchanges. It generally consisted of material that was compact, easily transportable and had a widely recognized value. Commodity money was a great improvement over simple barter
, in which commodities were simply exchanged against others. Ideally, commodity money had to be widely accepted, easily portable and storable, and easily combined and divided in order to correspond to different values. The main items of commodity money in Japan were arrowheads, rice
grains and gold
powder, as well as hemp
cloth.
This contrasted somewhat with countries like China
, where one of the most important item of commodity money came from the Southern seas: shells
. Since then however, the shell has become a symbol for money in many Chinese and Japanese ideograms.
The importance of metallic currency appeared to Japanese nobles, probably leading to some coin minting at the end of the 7th century, such as the Tomimotosen coinage (富元銭), discovered in 1998 through archaeological research in the area of Nara
. An entry of the Nihon Shoki
dated April 15, 683 CE mentions: "From now on, copper coins should be used, but silver coins should not be used", which is thought to order the adoption of the Tomimotosen copper coins.
. It was first minted in 708
CE on order of Empress Gemmei
, Japan's 43rd Imperial ruler. "Wadōkaichin" is the reading of the four characters printed on the coin, and is thought to be composed of the era name Wadō
(和銅, "Japanese copper"), which could alternatively mean "happiness", and "Kaichin", thought to be related to "Currency". This coinage was inspired by the Tang coinage (唐銭) named Kaigentsūhō (Chinese: 開元通宝, Kai Yuan Tong Bao), first minted in Chang'an
in 621 CE. The Wadokaichin had the same specifications as the Chinese coin, with a diameter of 2.4 cm and a weight of 3.75g.
Silver minting was soon abandoned however, but copper minting took place throughout the Nara period
. A variety of coin types are known, altogether 12 types, including one coin type in gold.
By the end of the 10th century, compounded with weaknesses in the political system, this led to the abandonment of the national currency, with the return to rice
as a currency medium. The last official Japanese coin emission occurred in 958, with very low quality coins called Kangendaihō (乾元大寶), which soon fell into disuse.
" piracy. Coins were also imported from Annam
(modern Vietnam
) and Korea
.
, when a new system was put in place.
.
Hideyoshi unified Japan, and thus centralized most of the minting of large denomination silver and gold coins, effectively putting in place the basis of a unified currency system. Hideyoshi developed the large Ōban
plate, also called the Tenshō Ōban (天正大判), in 1588, a predecessor to Tokugawa gold coinage.
A common practice in that period was also to melt gold into copper molds for convenience, derived from the sycee
manufacturing method. These were called Bundōkin (分銅金), of which there were two types, the small Kobundō (小分銅), and the large Ōbundō (大分銅). A Kobundō would represent about 373g in gold.
was a unitary and independent metallic monetary system established by Shogun
Tokugawa Ieyasu
in 1601 in Japan
, and which lasted throughout the Tokugawa period until its end in 1867.
From 1601, Tokugawa coinage consisted in gold, silver, and bronze denominations. The denominations were fixed, but the rates actually fluctuated on the exchange market. Tokugawa started by minting Keicho gold and silver coins, and Chinese copper coins were later replaced by Kan’ei Tsuho coins in 1670.
The material for the coinage came from gold and silver mines across Japan. To this effect, gold mines were newly opened and exploited, such as the Sado
gold mine or the Toi gold mine
in Izu Peninsula
. Regarding copper coins, the Kan'ei tsūhō coin (寛永通宝) came to replace the Chinese coins that had been in circulation in Japan, as well as those that were minted privately, and became the legal tender for small denominations.
Japan's first notes, called Yamada Hagaki, were issued around 1600 by Shinto
priests also working as merchants in the Ise
-Yamada (modern Mie Prefecture
), in exchange for silver. This was earlier than the first goldsmith
notes issued in England
around 1640. The first known feudal note was issued by the Fukui clan in 1661. During the 17th century, the Feudal Domains developed a system of feudal notes
, giving currency to pledged notes issued by the Lord of the Domain, in exchange for convertibility in gold, silver or copper. Japan thus combined gold, silver and copper standards, together with the circulation of paper money
.
Tokugawa coinage remained in used during the "Sakoku
" period of seclusion, although it became progressively debased. Debasement occurred progressively in attempts to resolve government deficits. The first debasement was called the Genroku Recoinage in 1695.
Foreign arbitrage
led to a massive outflow of gold, as gold traded for silver in Japan with a 1:5 ratio, whether that ratio was 1:15 abroad. During the Bakumatsu period in 1859 Mexican dollars were even given official currency in Japan, by coining them with marks in Japanese and officializing their exchange rate of three "Bu". They were called Aratame Sanbu Sadame (改三分定, "Fixed to the value of three bu").
Meanwhile, local governments issued their own currency anarchically, so that the nation’s money supply expanded by 2.5 times between 1859 and 1869, leading to crumbling money values and soaring prices. The system would be replaced by a new one, after the conclusion of the Boshin War
, and with the onset of the Meiji government in 1868.
was progressively established along Western lines, which has remained Japan's currency system to this day.
Immediately after the Meiji Restoration
in 1868, previous gold, silver and copper coins, as well as feudal notes were allowed continued circulation, leading to great confusion. In 1868, the government also issued coins and gold-convertible paper money, called Daijōkansatsu (太政官札), denominated in Ryō
, an old unit from the Yedo period, and private banks called Kawase Kaisha were allowed to issue their own currency as well. Complexity, widespread counterfeiting of gold coins and feudal notes led to widespread confusion.
along international lines, with 1 yen
corresponding to 1.5g of pure gold. The Meiji government issued new notes, called Meiji Tsūhōsatsu (明治通宝札) in 1872, which were printed in Germany
.
Silver coins were also issued for trade with Asian countries who favoured silver as a currency, thus establishing a de facto
gold-silver standard.
Severe inflation broke out with the Seinan Civil War in 1877. This was controlled by the reduction of government spending and the removal of paper currency from circulation. During the Seinan Civil War, an original type of paper money was issued by the rebel leader Saigō Takamori
in order to finance his war effort.
In 1881, the first Japanese note to feature a portrait, the Empress Jingu note (神功皇后札), was issued.
, the Bank of Japan
, was established in 1882. The bank would stabilize the currency by centralizing the issuance of convertible banknotes. The first central banknotes were issued by the Bank of Japan in 1885. They were called Daikokusatsu (大黒札), and were convertible in silver.
Following the devaluation of silver, and the abandon of silver as a currency standard by Western powers, Japan adopted the gold standard
through the Coinage Law of 1897. The yen was fixed at 0.75g of pure gold, and banknotes were issued which were convertible into gold. In 1899, the National Banks banknotes were declared invalid, leaving the Bank of Japan as the only supplier of currency.
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During World War I, Japan prohibited the export of gold in 1917, as did many countries such as the United States
. Gold convertibility was again shortly established in January 1930, only to be abandoned in 1931 when Great Britain abandoned the gold standard. Conversion of banknotes into gold was suspended.
From 1941, Japan formally adopted a managed currency system, and in 1942 the Bank of Japan Law officially suppressed the obligation of conversion.
In 1946, following the Second World War
, Japan removed the old currency (旧円券) and introduced the "New Yen" (新円券). Meanwhile, American occupation forces used a parallel system, called B Yen
, from 1945 to 1958.
Since then, together with the economic expansion of Japan, the yen has become one of the major currencies of the world.
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, before developing into an original system of its own.
Commodity money
Before the advent of the 7–8th century CE, Japan used commodity moneyCommodity money
Commodity money is money whose value comes from a commodity out of which it is made. It is objects that have value in themselves as well as for use as money....
for its exchanges. It generally consisted of material that was compact, easily transportable and had a widely recognized value. Commodity money was a great improvement over simple barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
, in which commodities were simply exchanged against others. Ideally, commodity money had to be widely accepted, easily portable and storable, and easily combined and divided in order to correspond to different values. The main items of commodity money in Japan were arrowheads, rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
grains and gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
powder, as well as hemp
Hemp
Hemp is mostly used as a name for low tetrahydrocannabinol strains of the plant Cannabis sativa, of fiber and/or oilseed varieties. In modern times, hemp has been used for industrial purposes including paper, textiles, biodegradable plastics, construction, health food and fuel with modest...
cloth.
This contrasted somewhat with countries like China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, where one of the most important item of commodity money came from the Southern seas: shells
Seashell
A seashell or sea shell, also known simply as a shell, is a hard, protective outer layer created by an animal that lives in the sea. The shell is part of the body of the animal. Empty seashells are often found washed up on beaches by beachcombers...
. Since then however, the shell has become a symbol for money in many Chinese and Japanese ideograms.
Embassy to the Tang court (630 CE)
Japan's contacts with the Chinese mainland became intense during the Tang period, with many exchanges and cultural imports occurring. The first Japanese embassy to China is recorded to have been sent in 630, following which Japan adopted numerous Chinese cultural practices.The importance of metallic currency appeared to Japanese nobles, probably leading to some coin minting at the end of the 7th century, such as the Tomimotosen coinage (富元銭), discovered in 1998 through archaeological research in the area of Nara
Nara Prefecture
is a prefecture in the Kansai region on Honshū Island, Japan. The capital is the city of Nara.-History:The present-day Nara Prefecture was created in 1887, making it independent of Osaka Prefecture....
. An entry of the Nihon Shoki
Nihon Shoki
The , sometimes translated as The Chronicles of Japan, is the second oldest book of classical Japanese history. It is more elaborate and detailed than the Kojiki, the oldest, and has proven to be an important tool for historians and archaeologists as it includes the most complete extant historical...
dated April 15, 683 CE mentions: "From now on, copper coins should be used, but silver coins should not be used", which is thought to order the adoption of the Tomimotosen copper coins.
First official coinage (708 CE)
Japan's first formal currency system was the Kōchōsen (Japanese: 皇朝銭, "Imperial currency"). It was exemplified by the adoption of Japan's first official coin type, the WadōkaichinWadokaichin
, also romanized as Wadō-kaichin or called Wadō-kaihō, is the oldest official Japanese coinage, having been minted starting in 708 AD on order of Empress Gemmei.-Description:...
. It was first minted in 708
708
Year 708 was a leap year starting on Sunday of the Julian calendar. The denomination 708 for this year has been used since the early medieval period, when the Anno Domini calendar era became the prevalent method in Europe for naming years.- Asia :* Byzantine Empire: March – The Umayyads...
CE on order of Empress Gemmei
Empress Gemmei
, also known as Empress Genmyō, was the 43rd emperor of Japan, according to the traditional order of succession.Gemmei's reign spanned the years 707 through 715....
, Japan's 43rd Imperial ruler. "Wadōkaichin" is the reading of the four characters printed on the coin, and is thought to be composed of the era name Wadō
Wado (era)
was a after Keiun and before Reiki. This period spanned the years from January 708 through September 715. The reigning empress was .-Change of era:...
(和銅, "Japanese copper"), which could alternatively mean "happiness", and "Kaichin", thought to be related to "Currency". This coinage was inspired by the Tang coinage (唐銭) named Kaigentsūhō (Chinese: 開元通宝, Kai Yuan Tong Bao), first minted in Chang'an
Chang'an
Chang'an is an ancient capital of more than ten dynasties in Chinese history, today known as Xi'an. Chang'an literally means "Perpetual Peace" in Classical Chinese. During the short-lived Xin Dynasty, the city was renamed "Constant Peace" ; yet after its fall in AD 23, the old name was restored...
in 621 CE. The Wadokaichin had the same specifications as the Chinese coin, with a diameter of 2.4 cm and a weight of 3.75g.
Currency reform (760 CE)
The Wadōkaichin soon became debased, as the government rapidly issued coins with progressively lesser metallic content, and local imitations thrived. In 760 CE a reform was put in place, in which a new copper coin called Mannentsūhō (万年通寶) was worth 10 times the value of the former Wadōkaichin, with also a new silver coin named Taiheigenbō (大平元寶) with a value of 10 copper coins, as well as a new gold coin named Kaikishōhō (開基勝寶) with a value of 10 silver coins.Silver minting was soon abandoned however, but copper minting took place throughout the Nara period
Nara period
The of the history of Japan covers the years from AD 710 to 794. Empress Gemmei established the capital of Heijō-kyō . Except for 5 years , when the capital was briefly moved again, it remained the capital of Japanese civilization until Emperor Kammu established a new capital, Nagaoka-kyō, in 784...
. A variety of coin types are known, altogether 12 types, including one coin type in gold.
Last emissions (958 CE)
The Kōchōsen Japanese system of coinage became strongly debased, with its metallic content and value decreasing. By the middle of the 9th century, the value of a coin in rice had fallen to 1/150th of its value of the early 8th century.By the end of the 10th century, compounded with weaknesses in the political system, this led to the abandonment of the national currency, with the return to rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
as a currency medium. The last official Japanese coin emission occurred in 958, with very low quality coins called Kangendaihō (乾元大寶), which soon fell into disuse.
Importation of Chinese coinage
From the 12th century, the expansion of trade and barter again highlighted the need for a currency. Chinese coinage came to be used as the standard currency of Japan, for a period lasting from the 12th to the 17th century. Coins were obtained from China through trade or through "WakōWokou
Wokou , which literally translates as "Japanese pirates" in English, were pirates of varying origins who raided the coastlines of China and Korea from the 13th century onwards...
" piracy. Coins were also imported from Annam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
(modern Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
) and Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
.
Imitations of Chinese coinage
As the Chinese coins were not in sufficient number as trade and economy expanded, local Japanese imitations of Chinese coins were made from the 14th century, especially imitations of Ming coins, with inscribed names identical to those of contemporary Chinese coins. These coins were considered as very low value compared to Chinese coins, and several of them had to be exchanged just for one Chinese coin. This situation would continue until the beginning of the Edo periodEdo period
The , or , is a division of Japanese history which was ruled by the shoguns of the Tokugawa family, running from 1603 to 1868. The political entity of this period was the Tokugawa shogunate....
, when a new system was put in place.
Local experiments (16th century)
The growth of the economy and trade meant that small copper currency became insufficient to cover the amounts that were being exchanged. During the Sengoku period, the characteristics of the future Edo Period system began to emerge. Local Lords developed trade, abolishing monopolistic guilds, which led to the need for large-denomination currencies. From the 16th century, local experiments started to be made, with the minting of local coins, sometimes in gold. Especially the Takeda clan of Kōshū minted gold coins which were later adopted by the Tokugawa ShogunateTokugawa shogunate
The Tokugawa shogunate, also known as the and the , was a feudal regime of Japan established by Tokugawa Ieyasu and ruled by the shoguns of the Tokugawa family. This period is known as the Edo period and gets its name from the capital city, Edo, which is now called Tokyo, after the name was...
.
Hideyoshi unified Japan, and thus centralized most of the minting of large denomination silver and gold coins, effectively putting in place the basis of a unified currency system. Hideyoshi developed the large Ōban
Ōban
An Ōban was a monetary ovoid gold plate, and the largest denomination of Tokugawa coinage. Tokugawa coinage worked according to a triple monetary standard, using gold, silver and bronze coins, each with their own denominations....
plate, also called the Tenshō Ōban (天正大判), in 1588, a predecessor to Tokugawa gold coinage.
A common practice in that period was also to melt gold into copper molds for convenience, derived from the sycee
Sycee
A sycee was a type of silver or gold ingot currency used in China until the 20th century. The name derives from the Cantonese words meaning "fine silk"...
manufacturing method. These were called Bundōkin (分銅金), of which there were two types, the small Kobundō (小分銅), and the large Ōbundō (大分銅). A Kobundō would represent about 373g in gold.
Tokugawa currency (17–19th century)
Tokugawa coinageTokugawa coinage
Tokugawa coinage was a unitary and independent metallic monetary system established by Shogun Tokugawa Ieyasu in 1601 in Japan, and which lasted throughout the Tokugawa period until its end in 1867.-History:...
was a unitary and independent metallic monetary system established by Shogun
Shogun
A was one of the hereditary military dictators of Japan from 1192 to 1867. In this period, the shoguns, or their shikken regents , were the de facto rulers of Japan though they were nominally appointed by the emperor...
Tokugawa Ieyasu
Tokugawa Ieyasu
was the founder and first shogun of the Tokugawa shogunate of Japan , which ruled from the Battle of Sekigahara in 1600 until the Meiji Restoration in 1868. Ieyasu seized power in 1600, received appointment as shogun in 1603, abdicated from office in 1605, but...
in 1601 in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, and which lasted throughout the Tokugawa period until its end in 1867.
From 1601, Tokugawa coinage consisted in gold, silver, and bronze denominations. The denominations were fixed, but the rates actually fluctuated on the exchange market. Tokugawa started by minting Keicho gold and silver coins, and Chinese copper coins were later replaced by Kan’ei Tsuho coins in 1670.
The material for the coinage came from gold and silver mines across Japan. To this effect, gold mines were newly opened and exploited, such as the Sado
Sado, Niigata
is a city located on Sado Island in Niigata Prefecture, in the Chūbu region of Japan. Since 2004, the city has comprised the entire island, although not all of its total area of 855.26 km2 is urbanized...
gold mine or the Toi gold mine
Toi gold mine
-Galleries:The galleries of the mine total about 100 kilometers in length, over a surface of 37 hectares, and go as deep as 180 meters below sea level. The area visible for tourism is about 350m long, and goes about 150 meters deep into mountain rock.-Legacy:...
in Izu Peninsula
Izu Peninsula
The is a large mountainous peninsula with deeply indented coasts to the west of Tokyo on the Pacific coast of the island of Honshū, Japan. Formerly the eponymous Izu Province, Izu peninsula is now a part of Shizuoka Prefecture...
. Regarding copper coins, the Kan'ei tsūhō coin (寛永通宝) came to replace the Chinese coins that had been in circulation in Japan, as well as those that were minted privately, and became the legal tender for small denominations.
Japan's first notes, called Yamada Hagaki, were issued around 1600 by Shinto
Shinto
or Shintoism, also kami-no-michi, is the indigenous spirituality of Japan and the Japanese people. It is a set of practices, to be carried out diligently, to establish a connection between present day Japan and its ancient past. Shinto practices were first recorded and codified in the written...
priests also working as merchants in the Ise
Ise
In geography, Ise may refer to:*Ise, Mie, a city in Japan**Ise Shrine, a Shinto shrine located in Ise, Mie*Ise Ekiti, a city in Nigeria*Ise, Norway, a village in Norway*Ise Province, an ancient province of Japan...
-Yamada (modern Mie Prefecture
Mie Prefecture
is a prefecture of Japan which is part of the Kansai regions on Honshū island. The capital is the city of Tsu.- History :Until the Meiji Restoration, Mie prefecture was known as Ise Province and Iga Province....
), in exchange for silver. This was earlier than the first goldsmith
Goldsmith
A goldsmith is a metalworker who specializes in working with gold and other precious metals. Since ancient times the techniques of a goldsmith have evolved very little in order to produce items of jewelry of quality standards. In modern times actual goldsmiths are rare...
notes issued in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
around 1640. The first known feudal note was issued by the Fukui clan in 1661. During the 17th century, the Feudal Domains developed a system of feudal notes
Scrip of Edo period Japan
During the Edo period, feudal domains of Japan issued scrip called ' for use within the domain. This paper currency supplemented the coinage of the Tokugawa shogunate. Most scrip carried a face value in silver coinage, but gold and copper scrip also circulated. In addition, some scrip was marked...
, giving currency to pledged notes issued by the Lord of the Domain, in exchange for convertibility in gold, silver or copper. Japan thus combined gold, silver and copper standards, together with the circulation of paper money
Paper Money
Paper Money is the second album by the band Montrose. It was released in 1974 and was the band's last album to feature Sammy Hagar as lead vocalist.-History:...
.
Tokugawa coinage remained in used during the "Sakoku
Sakoku
was the foreign relations policy of Japan under which no foreigner could enter nor could any Japanese leave the country on penalty of death. The policy was enacted by the Tokugawa shogunate under Tokugawa Iemitsu through a number of edicts and policies from 1633–39 and remained in effect until...
" period of seclusion, although it became progressively debased. Debasement occurred progressively in attempts to resolve government deficits. The first debasement was called the Genroku Recoinage in 1695.
Bakumatsu currency (1854–1868)
Tokugawa coinage fell apart following the reopening of Japan to the West in 1854, as the silver-gold rates gave huge opportunities for arbitrage to foreigners, leading to the loss of large quantities of gold to exportation.Foreign arbitrage
Arbitrage
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...
led to a massive outflow of gold, as gold traded for silver in Japan with a 1:5 ratio, whether that ratio was 1:15 abroad. During the Bakumatsu period in 1859 Mexican dollars were even given official currency in Japan, by coining them with marks in Japanese and officializing their exchange rate of three "Bu". They were called Aratame Sanbu Sadame (改三分定, "Fixed to the value of three bu").
Meanwhile, local governments issued their own currency anarchically, so that the nation’s money supply expanded by 2.5 times between 1859 and 1869, leading to crumbling money values and soaring prices. The system would be replaced by a new one, after the conclusion of the Boshin War
Boshin War
The was a civil war in Japan, fought from 1868 to 1869 between forces of the ruling Tokugawa shogunate and those seeking to return political power to the imperial court....
, and with the onset of the Meiji government in 1868.
Modern era: Japanese yen (1871–present)
Following 1868, a new currency system based on the Japanese yenJapanese yen
The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...
was progressively established along Western lines, which has remained Japan's currency system to this day.
Immediately after the Meiji Restoration
Meiji Restoration
The , also known as the Meiji Ishin, Revolution, Reform or Renewal, was a chain of events that restored imperial rule to Japan in 1868...
in 1868, previous gold, silver and copper coins, as well as feudal notes were allowed continued circulation, leading to great confusion. In 1868, the government also issued coins and gold-convertible paper money, called Daijōkansatsu (太政官札), denominated in Ryō
Ryo
Ryo may refer to:* The Japanese kana digraph ryo, ryō, or ryoh * Ryō , a gold piece in pre-Meiji era Japan worth about sixty monme or four kan...
, an old unit from the Yedo period, and private banks called Kawase Kaisha were allowed to issue their own currency as well. Complexity, widespread counterfeiting of gold coins and feudal notes led to widespread confusion.
Birth of the yen: New Currency Act (1871)
Through the New Currency Act of 1871, Japan adopted the gold standardGold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
along international lines, with 1 yen
Japanese yen
The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...
corresponding to 1.5g of pure gold. The Meiji government issued new notes, called Meiji Tsūhōsatsu (明治通宝札) in 1872, which were printed in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
.
Silver coins were also issued for trade with Asian countries who favoured silver as a currency, thus establishing a de facto
De facto
De facto is a Latin expression that means "concerning fact." In law, it often means "in practice but not necessarily ordained by law" or "in practice or actuality, but not officially established." It is commonly used in contrast to de jure when referring to matters of law, governance, or...
gold-silver standard.
National Bank Act (1872)
The National Bank Act of 1872 led to the establishment of 4 banks between 1873 and 1874, until there were more than 153 national banks by the end of 1879. The national banks issued identically designed convertible notes, which were effective in funding the industry and progressively replaced government notes. In 1876, an amendment allowed the banks to make the banknotes virtually non convertible. These national banknotes imitated the design of American banknotes, although the name of the issuer was different for each.Severe inflation broke out with the Seinan Civil War in 1877. This was controlled by the reduction of government spending and the removal of paper currency from circulation. During the Seinan Civil War, an original type of paper money was issued by the rebel leader Saigō Takamori
Saigo Takamori
was one of the most influential samurai in Japanese history, living during the late Edo Period and early Meiji Era. He has been dubbed the last true samurai.-Early life:...
in order to finance his war effort.
In 1881, the first Japanese note to feature a portrait, the Empress Jingu note (神功皇后札), was issued.
Bank of Japan (1882)
In order to regularize the issuance of convertible banknotes, a central bankCentral bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
, the Bank of Japan
Bank of Japan
is the central bank of Japan. The Bank is often called for short. It has its headquarters in Chuo, Tokyo.-History:Like most modern Japanese institutions, the Bank of Japan was founded after the Meiji Restoration...
, was established in 1882. The bank would stabilize the currency by centralizing the issuance of convertible banknotes. The first central banknotes were issued by the Bank of Japan in 1885. They were called Daikokusatsu (大黒札), and were convertible in silver.
Following the devaluation of silver, and the abandon of silver as a currency standard by Western powers, Japan adopted the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
through the Coinage Law of 1897. The yen was fixed at 0.75g of pure gold, and banknotes were issued which were convertible into gold. In 1899, the National Banks banknotes were declared invalid, leaving the Bank of Japan as the only supplier of currency.
20th century
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Gold convertibility was again shortly established in January 1930, only to be abandoned in 1931 when Great Britain abandoned the gold standard. Conversion of banknotes into gold was suspended.
From 1941, Japan formally adopted a managed currency system, and in 1942 the Bank of Japan Law officially suppressed the obligation of conversion.
In 1946, following the Second World War
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, Japan removed the old currency (旧円券) and introduced the "New Yen" (新円券). Meanwhile, American occupation forces used a parallel system, called B Yen
B yen
was a colloquial term used to refer to a form of military scrip used in post-war US-Occupied Okinawa from July 1948 to September 1958. Officially, it was called .-Currency:The B yen bills were of a blue or green color, and came in eight different denominations....
, from 1945 to 1958.
Since then, together with the economic expansion of Japan, the yen has become one of the major currencies of the world.