User:Donald Trung/Shunzhi Tongbao (順治通寶)

Bimetallism
Under the Shunzhi Emperor's reign the bimetallic currency system of the Qing dynasty was codified. The system was based on both copper and silver with a fixed rate. Initially the government of the Qing dynasty fixed the exchange rate at 700 copper-alloy cash coins for 1 tael of silver, but in 1645 was adjusted to 1000:1 (wén/tael), which would continue to be the official government exchange rate for most of the Qing dynasty period. This exchange rate was later officially modified to 1500:1 in the year 1848, and again to 2000:1 during the 1850s, according to Qing Shi Lu and other government decrees.

The Chinese bimetallic system differed from the one that was in place in Europe. In the European system, the viability of an idealised bimetallic currency system was completely dependent on effective private arbitrage, which in turn requires a large size of specie supply to be in the hands of the public and to allow free minting. In the European system when these conditions were all not met then the system of bimetallism wasn't feasible and would be described as being "limping bimetallism". In contrast, the Chinese bimetallic system was unstable by design. Neither copper nor silver could be freely imported nor exported in Chinese system in order to keep the official exchange rate at the same level. This system would prove to make the convenience of exchange and predictability of the market less easy. If the change of the ratio between both metals in this system becomes frequent and volatile, the system itself becomes very expensive for the government to maintain.

For most of the time, the bimetallic currency system of the Qing dynasty was contained because the local Chinese markets tended to be far from integrated with each other, and the copper and silver currencies were only loosely linked with each other in seasonal wholesale markets. This meant that any gradual changes to the supply and price of one metal would only be seasonably visible.

The bimetallic currency system of the Qing dynasty was only sustainable as long as the market price ratio between both silver and copper didn't fluctuate either in greatly in number or greatly in frequency. During most of the history of the Qing dynasty this was not the case, as China had a big and relatively closed off economy that allowed for the money supply to remain stable irrelevant of outside factors. Furthermore, the copper-alloy cash coin and silver currencies both functioned on completely different levels of the market, as copper was used in smaller transactions in more impoverished areas while silver was used for larger transactions in wealthier and more urbanised areas, this meant that the copper and silver currencies did not confront each other very often in the market as they were used in different sectors of the economy.

In reality, the private market adjusted the exchange ratio between copper-alloy cash coins and silver regardless of the official exchange rate, but because these adjustments were all based on the local supplies and demands of each metal every region had its own exchange rate and the local ratio would also reach a local equilibrium. Furthermore, because the domestic Chinese market at the time was far from integrated with each other and every region tended to conduct trade regionally, the different local equilibria would rarely, if ever, confront each other in practice. Because of this, the discrepancies that arose in terms of the regional copper/silver exchange ratios did not impose any major challenges to the Chinese economy overall during the early Qing dynasty period.

Because of all these factors the unofficial exchange ratios between copper-alloy cash coins and silver remained loosely defined and was relatively flexible; this system further allowed for occasional modifications which tended not to be either too frequent or too drastic for destabilise the bimetallic currency system, making it quite sound as long as the Chinese market wasn't affected by outside forces.

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