China’s New Digital Currency And Implications For Insurers And Insurtech
Since Antiquity, China Had Led World With Adoption Of Cutting-Edge Currency. Today, Immense Interest Surrounding China’s New Digital Yuan.
Since Antiquity, China Had Led The World With Its Adoption Of Cutting-Edge Currency. Today, There Is An Immense Amount Of Interest Surrounding China’s New Digital Yuan (“DCEP” – Digital Currency Electronic Payment). However, China’s history of currency innovation goes back to ancient times. Unlike Roman coins, ancient Chinese coins are marked by a square hole in the middle, allowing the bearer to efficiently string large amounts together for ease of transport.
A “开元通宝”, kāiyuán tōng bǎo; ‘Circulating treasure from the inauguration of a new epoch’. Attribution: Unknown. Another innovation was the use of bolts of silk. In ancient times, silk was issued to garrisoned troops along the silk road as a form of payment, because it was lighter than coins and easier to transport overland from the then-imperial capital of Chang’An (present-day Xi’an).
A plain, basket-weave (one thread over, one thread under) bolt of silk from the 3rd or 4th century CE and currently housed at the British Museum. Before it snapped in half, this bolt was sent as payment to garrisoned Chinese troops in the silk road city of Krorän (also known as Loulan). Attribution: Valerie Henson, The Silk Road, Colour Plate 5A.
Promissory bank notes appeared a few hundred years after silk bolts were used, in Tang dynasty China. These promissory notes allowed merchants to conclude large transactions without needing to carry heavy loads of metal coins (Tiě qián, 贴钱) on their person. Another few hundred years later, real paper currency (Jiāo zi, 交子) appeared in Song dynasty China (although Chinese paper already existed when silk was used as payment, it was mostly for wrapping and it took some time for paper currency Jiāo zi to emerge).
China is starting a new chapter in its currency innovations
Fast forward to today: with the proliferation of Wechat Pay and Alipay during the 2010s, China has, more than a millennium after inventing paper bank notes, become the first major economy to transform into a cashless society. In this regard, China is already miles ahead of other developed markets.
This news was originally published at Mondaq.