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From Wikipedia, the free encyclopedia

Japanese yen
Circulated coins in all 6 denominations
Circulated coins in all 6 denominations
ISO 4217 Code JPY
User(s)  Japan
Inflation −1.3%
Source The Statistics Bureau and the Director-General for Policy Planning, 2010 Feb. est.
1/100 sen
1/1000 rin
Symbol ¥
Plural The language(s) of this currency does not have a morphological plural distinction.
Coins ¥1, ¥5, ¥10, ¥50, ¥100, ¥500
Banknotes ¥1000, ¥2000, ¥5000, ¥10000
Central bank Bank of Japan
Printer National Printing Bureau
Mint Japan Mint

The yen ( en?) (sign: ¥; code: JPY) is the currency of Japan. It is the third most-traded currency in the foreign exchange market after United States dollar and the euro.[1] It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling. As is common when counting in East Asia, large quantities of yen are often counted in multiples of 10,000 (man, 万) in the same way as values in Western countries are often quoted in thousands.


Pronunciation and etymology

Yen is pronounced "en" [eɴ] among Japanese. The word (Shinjitai:円, Traditional Chinese/Kyūjitai:圓) literally means "round object" in Japanese, as yuán does in Chinese. Originally, Chinese had traded silver in mass, and when Spanish and Mexican silver coins arrived, they called them 銀圓 (silver round) for their circular shapes.[2] The coins and the name also appeared in Japan. Afterwards, the Chinese abbreviated 圓 with 元 which has the same pronunciation in Mandarin (but not in Japanese), while the Japanese preferred 圓 and it remains even now.

The spelling and pronunciation "yen" is standard in English. This is because mainly English speakers who visited Japan at the end of the Edo era to the early Meiji era spelled words this way. In the 16th century, Japanese "e (エ)/we (ヱ)" had been pronounced [je] and Portuguese missionaries had spelled them that way. Some time thereafter, by the middle of the 18th century, "e/we" came to be pronounced [e] as in modern Japanese, although some regions retain the [je] pronunciation. Walter Henry Medhurst, who had not come to Japan and interviewed some Japanese in Batavia (Jakarta), spelled some "e"s as "ye" in his An English and Japanese, and Japanese and English Vocabulary (1830).[3] In the early Meiji era, James Curtis Hepburn, following Medhurst, spelled all "e"s as "ye" in his A Japanese and English dictionary (1st ed.[4] 1867). That was the first full-scale Japanese-English/English-Japanese dictionary, which had a strong influence on Westerners in Japan and probably prompted the spelling "yen". Hepburn revised most of "ye"s to "e" in the 3rd edition (1886) [5] in order to mirror the contemporary pronunciation, except "yen".[6] This was probably already fixed and have remained so ever since.




Early 1 yen banknote, front and reverse.

In the nineteenth century silver Spanish dollar coins were prolific throughout South east Asia, the China coast, and Japan. These coins had been introduced through Manila over a period of two hundred and fifty years, arriving on ships from Acapulco in Mexico. These ships were known as the Manila galleons. Until the nineteenth century these silver dollar coins were actual Spanish dollars minted in the new world, mostly at Mexico City. But from the 1840s they were increasingly replaced by silver dollars of the new Latin American republics. In the latter half of the nineteenth century some local coins in the region were made in the likeness of the Mexican dollar. The first of these local silver coins was the Hong Kong silver dollar coin that was minted at a mint in Hong Kong between the years 1866 and 1868. The Chinese were slow to accept unfamiliar coinage and preferred the familiar Mexican dollars, and so the Hong Kong government ceased minting these coins and sold the mint machinery to Japan.

Early one yen coin (1.5g of pure gold), front and reverse.

The Japanese then decided to adopt a silver dollar coinage under the name of 'yen', meaning 'a round object'. The yen was officially adopted by the Meiji government in an Act signed on May 10, 1871.[7] The new currency was gradually introduced beginning from July of that year. The Yen was therefore basically a dollar unit, like all dollars, descended from the Spanish Pieces of eight, and up until the year 1873, all the dollars in the world were more or less the same value. The yen replaced Tokugawa coinage, a complex monetary system of the Edo period based on the mon. The New Currency Act of 1871 stipulated the adoption of the decimal accounting system of yen (1, 圓), sen (1100, 錢), and rin (11000, 厘), with the coins being round and cast as in the West. The yen was legally defined as 0.78 troy ounces (24.26 g) of pure silver, or 1.5 grams of pure gold hence putting it on a bimetallic standard. (The same amount of silver is worth about 1181 modern yen,[8] while the same amount of gold is worth about 4715 yen.[9])

Early silver one yen coin, 24.26 grams of pure silver, Japan.

Following the silver devaluation of 1873, the yen devalued against the US dollar and the Canadian dollar units since they adhered to a gold standard, and by the year 1897 the yen was worth only about 50 cents(US). In that year, Japan adopted a gold exchange standard and hence froze the value of the yen at 50 cents. [10]

(The sen and the rin were eventually taken out of circulation at the end of 1953.)[11]

Fixed value of the yen to the US dollar

The yen lost most of its value during and after World War II. After a period of instability, in 1949, the value of the yen was fixed at ¥360 per US$1 through a United States plan, which was part of the Bretton Woods System, to stabilize prices in the Japanese economy. That exchange rate was maintained until 1971, when the United States abandoned the gold standard, which had been a key element of the Bretton Woods System, and imposed a 10 percent surcharge on imports, setting in motion changes that eventually led to floating exchange rates in 1973.

Undervalued yen

By 1971 the yen had become undervalued. Japanese exports were costing too little in international markets, and imports from abroad were costing the Japanese too much. This undervaluation was reflected in the current account balance, which had risen from the deficits of the early 1960s to a then-large surplus of U.S. $5.8 billion in 1971. The belief that the yen, and several other major currencies, were undervalued motivated the United States' actions in 1971.

Yen and major currencies float

Following the United States' measures to devalue the dollar in the summer of 1971, the Japanese government agreed to a new, fixed exchange rate as part of the Smithsonian Agreement, signed at the end of the year. This agreement set the exchange rate at ¥308 per US$1. However, the new fixed rates of the Smithsonian Agreement were difficult to maintain in the face of supply and demand pressures in the foreign-exchange market. In early 1973, the rates were abandoned, and the major nations of the world allowed their currencies to float.

Japanese government intervention in the currency market

In the 1970s, Japanese government and business people were very concerned that a rise in the value of the yen would hurt export growth by making Japanese products less competitive and would damage the industrial base. The government therefore continued to intervene heavily in foreign-exchange marketing (buying or selling dollars), even after the 1973 decision to allow the yen to float.

Despite intervention, market pressures caused the yen to continue climbing in value, peaking temporarily at an average of ¥271 per US$1 in 1973 before the impact of the 1973 oil crisis was felt. The increased costs of imported oil caused the yen to depreciate to a range of ¥290 to ¥300 between 1974 and 1976. The re-emergence of trade surpluses drove the yen back up to ¥211 in 1978. This currency strengthening was again reversed by the second oil shock in 1979, with the yen dropping to ¥227 by 1980.

Yen in the early 1980s

During the first half of the 1980s, the yen failed to rise in value even though current account surpluses returned and grew quickly. From ¥221 in 1981, the average value of the yen actually dropped to ¥239 in 1985. The rise in the current account surplus generated stronger demand for yen in foreign-exchange markets, but this trade-related demand for yen was offset by other factors. A wide differential in interest rates, with United States interest rates much higher than those in Japan, and the continuing moves to deregulate the international flow of capital, led to a large net outflow of capital from Japan. This capital flow increased the supply of yen in foreign-exchange markets, as Japanese investors changed their yen for other currencies (mainly dollars) to invest overseas. This kept the yen weak relative to the dollar and fostered the rapid rise in the Japanese trade surplus that took place in the 1980s.

Effect of the Plaza Accord

1977 Nishiki International
Ten speed road bike

Japanese bicycle brands such as Nishiki had enjoyed tremendous success during the United States' 1970's bike boom, only to suffer during the late 1980s Yen fluctuation. Because of the steep decline in the Yen's value, the manufacture of Nishiki bicycles was moved from Japan in 1989 to Giant Bicycles in Taiwan. The brand was ultimately absorbed by Derby International, which discontinued the brand in the United States in 2001.

In 1985 a dramatic change began. Finance officials from major nations signed an agreement (the Plaza Accord) affirming that the dollar was overvalued (and, therefore, the yen undervalued). This agreement, and shifting supply and demand pressures in the markets, led to a rapid rise in the value of the yen. From its average of ¥239 per US$1 in 1985, the yen rose to a peak of ¥128 in 1988, virtually doubling its value relative to the dollar. After declining somewhat in 1989 and 1990, it reached a new high of ¥123 to US$1 in December 1992. In April 1995, the yen hit a peak of under 80 yen per dollar, temporarily making Japan's economy nearly the size of the US.

Post-bubble years

The yen declined during the Japanese asset price bubble and continued to do so afterwards, reaching a low of ¥134 to US$1 in February 2002. The Bank of Japan's policy of zero interest rates has discouraged yen investments, with the carry trade of investors borrowing yen and investing in better-paying currencies (thus further pushing down the yen) estimated to be as large as $1 trillion.[12] In February 2007, The Economist estimated that the yen is 15% undervalued against the dollar and as much as 40% undervalued against the euro.[13]


Early 20 yen gold coin.

Coins were introduced in 1870. There were silver 5, 10, 20 and 50 sen and 1 yen, and gold 2, 5, 10 and 20 yen. Gold 1 yen were introduced in 1871, followed by copper 1 rin, ½, 1 and 2 sen in 1873.

Cupronickel 5 sen coins were introduced in 1889. In 1897, the silver 1 yen coin was demonetized and the sizes of the gold coins were reduced by 50%, with 5, 10 and 20 yen coins issued. In 1920, cupro-nickel 10 sen coins were introduced.

Production of silver coins ceased in 1938, after which a variety of base metals were used to produce 1, 5 and 10 sen coins during the Second World War. Clay 5 and 10 yen coins were produced in 1945 but not issued for circulation.

After the war, brass 50 yen, 1 and 5 yen were introduced between 1946 and 1948. In 1949, the current type of holed 5 yen was introduced, followed by bronze 10 yen (of the type still in circulation) in 1951.

Japanese 10 yen coin (obverse) showing Phoenix Hall of Byōdō-in

Coins in denominations of less than 1 yen became invalid on December 31, 1953, following enforcement of the Small Currency Disposition and Fractional Rounding in Payments Act (小額通貨の整理及び支払金の端数計算に関する法律 Shōgaku tsūka no seiri oyobi shiharaikin no hasūkeisan ni kan suru hōritsu?).

In 1955, the current type of aluminium 1 yen was introduced, along with unholed, nickel 50 yen. In 1957, silver 100 yen pieces were introduced. These were replaced in 1967 by the current, cupro-nickel type, along with the holed 50 yen coin. In 1982, the first 500 yen coins were introduced.[14]

The date (expressed as the year in the reign of the current emperor) is on the reverse of all coins, and, in most cases, country name (through 1945, 大日本 or Dai Nippon, "Great Japan"; after 1945, 日本国, Nihon koku, "State of Japan") and the value in kanji is on the obverse, except for the present 5-yen coin where the country name is on the reverse.

As of September 4, 2009, 500 yen coins are the highest valued coins to be used regularly in the world (this place is typically taken by the 5 Cuban convertible peso coins), with values in the neighborhood of US$5.50, €3.90, £3.80 and CHF 5.80. The United States' largest-valued commonly-used coin (25¢) is worth ¥23; the Eurozone's largest (€2) is worth ¥255; the United Kingdom's largest (£2) is worth ¥260; and Switzerland's largest (CHF 5) is worth ¥430. Because of this high face value, the 500 yen has been a favorite target for counterfeiters. It was counterfeited to such an extent that in 2000 a new series of coins was issued with various security features. In spite of these changes, however, counterfeiting continues.[citation needed]

The 1 yen coin is made out of 100% aluminum.

On various occasions, commemorative coins are minted, often using gold and silver with face values as high as 100,000 yen.[15] The first of these were silver ¥100 and ¥1000 Summer Olympic coins issued for the 1964 games. Recently this practice is undertaken with the 500 yen coin, first in commemoration of the Nagano Olympic games in 1998, and then the Aichi Expo in 2005. The current commemorative 500 and 1000 yen coin series began circulation in December, 2009, with 47 unique designs for each with only one available from banks in each prefecture. 100000 of each have been minted and they are all currently (as of February, 2010) still available in major banks at face value. Someone collecting one of each coin would need to invest 70500 yen, thus creating a major source of income for the Japanese government. Even though all commemorative coins can be used, they are not seen often in typical daily use and normally do not circulate.

Instead of displaying the CE year of mintage like most nations' coins, yen coins instead display the year of the current emperor's reign. For example, a coin minted in 2009 would bear the date Heisei 21 (the 21st year of Emperor Akihito's reign).[16]

Currently circulating coins [3]
Image Value Technical parameters Description Date of first minting
Diameter Thickness Mass Composition Edge Obverse Reverse
1JPY.JPG ¥1 20 mm 1.2 mm 1 g 100% aluminium Smooth Young tree, state title, value Value, year of minting 1955
5JPY.JPG ¥5 22 mm 1.5 mm 3.75 g 60–70% copper
30–40% zinc
Smooth Ear of Rice, gear, water, value State title, year of minting 1949
10JPY.JPG ¥10 23.5 mm 1.5 mm 4.5 g 95% copper
3–4% zinc
1–2% tin
Reeded Hōōdō Temple, Byōdō-in, state title, value Evergreen tree, value, year of minting 1951
Smooth 1959
50JPY.JPG ¥50 21 mm 1.7 mm 4 g Cupronickel
75% copper
25% nickel
Reeded Chrysanthemum, state title, value Value, year of minting 1967
100JPY.JPG ¥100 22.6 mm 1.7 mm 4.8 g Cupronickel
75% copper
25% nickel
Reeded Cherry blossoms, state title, value Value, year of minting 1967
500yen showa57.jpg ¥500 26.5 mm 2 mm 7.2 g Cupronickel
75% copper
25% nickel
Smooth with lettering ("NIPPON ◆ 500 ◆ NIPPON ◆ 500 ◆") Paulownia, state title, value Value, bamboo, Mandarin orange, year of minting 1982 (no longer in mintage, limited circulation)
500JPY.JPG 7 g 72% copper
20% zinc
8% nickel
Reeded slantingly Value, bamboo, Mandarin orange, year of minting, latent image [4] 2000
These images are to scale at 2.5 pixels per millimeter. For table standards, see the coin specification table.

Due to the great differences in style, size, weight and the pattern present on the edge of the coin they are very easy for blind people to tell apart from one another.

Unholed Holed
Smooth edge ¥1 (light)
¥10 (medium)
Reeded edge ¥100 (medium)
¥500 (heavy)


A Series D 2000 yen note, featuring Shureimon

The issuance of the yen banknotes began in 1872, two years after the currency was introduced. Throughout its history, the denominations have ranged from 10 yen to 10000 yen.

Before and during World War II, various bodies issued banknotes in yen, such as the Ministry of Finance and the Imperial Japanese National Bank. The Allied forces also issued some notes shortly after the war. Since then, the Bank of Japan has been the exclusive note issuing authority. The bank has issued five series after World War II. Series E, the current series, consists of ¥1000, ¥2000, ¥5000, and ¥10,000.

Determinants of value

Beginning in December 1931, Japan gradually shifted from the gold standard system to the managed currency system.[17]

The relative value of the yen is determined in foreign exchange markets by the economic forces of supply and demand. The supply of the yen in the market is governed by the desire of yen holders to exchange their yen for other currencies to purchase goods, services, or assets. The demand for the yen is governed by the desire of foreigners to buy goods and services in Japan and by their interest in investing in Japan (buying yen-denominated real and financial assets).

Since the 1990s, the Bank of Japan, the country's central bank, has kept interest rates low in order to spur economic growth. Short-term lending rates have responded to this monetary relaxation and fell from 3.7% to 1.3% between 1993 and 2008.[18] Low interest rates combined with a ready liquidity for the Yen prompted investors to borrow money in Japan and invest it in other countries (a practice known as carry trade). This has helped to keep the value of the Yen low compared to other currencies.

International reserve currency

The Special Drawing Rights (SDR) Valuation is an IMF basket of currencies, including the Japanese yen. The SDR is linked to a basket of currencies with 44% for the dollar, 34% for the euro, and 11% each for the yen and pound sterling. The exchange rate for the Japanese yen is expressed in terms of currency units per U.S. dollar; other rates are expressed as U.S. dollars per currency unit. The SDR currency value is calculated daily and the valuation basket is reviewed and adjusted every five years. The SDR was created in 1969 to support the fixed exchange system.

Critics worry that the SDR (Special Drawing Rights) or the amount of SDRs will not rival the dollar, euro or yen:

Far from becoming a separate international currency, the SDR will remain a derivative of the dollar and a few other major national currencies.


Also, the SDR does not contain the Chinese Yuan, Indian Rupee, Australian Dollar or Canadian Dollar, which are important benchmark or secondary global reserve currencies.

Historical exchange rate

The table below shows the number of yen per U.S. dollar (monthly average).[20]

Year Month
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1949–71 360
1972 308
1973 301.15 270.00 265.83 265.50 264.95 265.30 263.45 265.30 265.70 266.68 279.00 280.00
1974 299.00 287.60 276.00 279.75 281.90 284.10 297.80 302.70 298.50 299.85 300.10 300.95
1975 297.85 286.60 293.80 293.30 291.35 296.35 297.35 297.90 302.70 301.80 303.00 305.15
1976 303.70 302.25 299.70 299.40 299.95 297.40 293.40 288.76 287.30 293.70 296.45 293.00
1977 288.25 283.25 277.30 277.50 277.30 266.50 266.30 267.43 264.50 250.65 244.20 240.00
1978 241.74 238.83 223.40 223.90 223.15 204.50 190.80 190.00 189.15 176.05 197.80 195.10
1979 201.40 202.35 209.30 219.15 219.70 217.00 216.90 220.05 223.45 237.80 249.50 239.90
1980 238.80 249.80 249.70 238.30 224.40 218.15 226.85 219.20 212.00 211.75 216.75 203.60
1981 205.20 208.85 211.40 215.00 223.50 225.75 239.75 228.75 231.55 233.35 214.15 220.25
1982 228.45 235.20 248.30 236.30 243.70 255.55 256.65 259.60 269.40 277.40 253.45 235.30
1983 238.40 235.55 239.30 237.70 238.60 239.80 241.50 246.75 236.10 233.65 234.20 232.00
1984 234.74 233.28 224.75 226.30 231.63 237.45 245.45 241.70 245.40 245.30 246.50 251.58
1985 254.78 259.00 250.70 251.40 251.78 248.95 236.65 237.10 216.00 211.80 202.05 200.60
1986 192.65 180.45 179.65 168.10 172.05 163.95 154.15 156.05 153.63 161.45 162.20 160.10
1987 152.30 153.15 145.65 139.65 144.15 146.75 149.25 142.35 146.35 138.55 132.45 122.00
1988 127.18 128.12 124.50 124.82 124.80 132.20 132.53 134.97 134.30 125.00 121.85 125.90
1989 129.13 127.15 132.55 132.49 142.70 143.95 138.40 144.28 139.35 142.15 142.90 143.40
1990 144.40 148.52 157.65 159.08 151.75 152.85 147.50 144.50 137.95 129.35 132.75 135.40
1991 131.40 131.95 140.55 137.42 137.97 138.15 137.83 136.88 132.95 131.00 130.07 125.25
1992 125.78 129.33 133.05 133.38 128.33 125.55 127.30 123.42 119.25 123.35 124.75 124.65
1993 124.30 117.85 115.35 111.10 107.45 106.51 105.60 104.18 105.10 108.23 108.82 111.89
1994 109.55 104.30 102.80 102.38 104.38   98.95   99.93   99.57   98.59   97.37   98.98   99.83
1995   98.58   96.93   88.38   83.77   83.19   84.77   88.17   97.46   98.18 101.90 101.66 102.91
1996 106.92 104.58 106.49 104.29 108.37 109.88 107.13 108.40 111.45 113.27 113.44 115.98
1997 122.13 120.88 123.97 126.92 116.43 114.30 117.74 119.39 121.44 120.29 127.66 129.92
1998 127.34 126.72 133.39 131.95 138.72 139.95 143.79 141.52 135.72 116.09 123.83 115.20
1999 115.98 120.32 119.99 119.59 121.37 120.87 115.27 110.19 105.66 104.89 102.42 102.08
2000 106.90 110.27 105.29 106.44 107.30 105.40 109.52 106.43 107.75 108.81 111.07 114.90
2001 116.38 116.44 125.27 124.06 119.06 124.27 124.79 118.92 119.29 121.84 123.98 131.47
2002 132.94 133.89 132.71 127.97 123.96 119.22 119.82 117.97 121.79 122.48 122.44 119.37
2003 119.21 117.75 119.02 119.46 118.63 119.82 120.11 117.13 110.48 108.99 109.34 106.97
2004 105.88 109.08 103.95 110.44 109.56 108.69 111.67 109.86 110.92 105.87 103.17 103.78
2005 103.58 104.58 106.97 105.87 108.17 110.37 112.18 111.42 113.28 115.67 119.46 117.48
2006 117.18 116.35 117.47 114.32 111.85 114.66 114.47 117.23 117.91 118.01 117.23 115.57
2007 120.59 120.49 117.29 118.81 120.77 122.64 121.56 116.74 115.01 115.77 111.24 112.28
2008 107.60 107.18 100.83 102.41 104.11 106.86 106.76 109.24 106.71 100.20   95.01   90.28
2009 89.51 97.87 98.31 97.67 96.45 96.61 94.37 94.90 91.27 90.37    
Year Month
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Current JPY exchange rates

See also

Older currency


  1. ^ [1]
  2. ^ Mikami Ryuzo, an article about the yen in Sekai Daihyakka Jiten, Kato Shuichi(ed.), Vol.3, Tokyo: Heibonsha, 2007
  3. ^ Medhurst, Walter Henry. (1830).Current inflation is at 5% An English and Japanese, and Japanese and English Vocabulary: Compiled from Native Works, p. 296.
  4. ^ Hepburn, James Curtis. (1867). A Japanese and English Dictionary,
  5. ^ Hepburn, James Curtis. All editions here
  6. ^
  7. ^ A. Piatt Andrew, Quarterly Journal of Economics, "The End of the Mexican Dollar",18:3:321-356, 1904, p.345
  8. ^ (2006-09-07). "Equivalent of 0.78 troy ounce of silver in yen". Retrieved 2006-09-07. 
  9. ^ (2006-09-07). "Equivalent of 0.04822612 troy ounce of gold in yen". Retrieved 2006-09-07. 
  10. ^ [2]
  11. ^ A law of the abolition of currencies in a small denomination and rounding off a fraction, July 15, 1953 Law No.60 (小額通貨の整理及び支払金の端数計算に関する法律 Shōgakutsūka no seiri oyobi shiharaikin no hasūkeisan ni kansuru hōritsu?))
  12. ^ "What Keeps Bankers Awake at Night? The Economist (London). February 1, 2007.
  13. ^ "The Cheap Yen is Dangerous," The Economist (London). February 8, 2007.
  14. ^ Japan Mint. "Number of Coin Production (calendar year)". Archived from the original on 2006-11-10. Retrieved 2006-09-07. 
  15. ^ Japan Mint. "Commemorative Coins issued up to now". Archived from the original on 2006-11-09. Retrieved 2006-09-07. 
  16. ^ Japan Mint. "Designs of circulating coins". Retrieved 2007-12-26. 
  17. ^ Japan Mint. 2006 "75th anniversary of Japan's shift from gold standard to managed currency system". 2006. Retrieved 2007-12-26. 
  18. ^ Bank of Japan: "Statistics." 2008.
  19. ^
  20. ^ Bank of Japan: "Foreign Exchange Rates." 2006.

Further reading

External links


Preceded by:
Japanese mon
Currency of Japan
1870 –
Succeeded by:

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.


Commodity money

File:Shell to
The ideogram for shell () was incorporated into the ancient character for "coin"/ "treasure" () in Japanese (right).

Before the advent of the 7–8th century CE, Japan used commodity 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, 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.[1]

This contrasted somewhat with countries like China, where one of the most important item of commodity money came from the Southern seas: shells.[1] Since then however, the shell has become a symbol for money in many Chinese and Japanese ideograms.[1]

Kōchōsen currency system (8–10th century)

Embassy to the Tang court (630 CE)

File:Japanese embassy to the Tang
Japanese embassy to the Tang court.
File:Nihon Shoki 15 April
The Nihon Shoki entry of 15 April 683 CE (Tenmu 12th year) mandates the use of copper coins.
File:Tomimotosen Tobishimaike end of 7th century copper and
Early Japanese minting: Tomimotosen (富本銭), found in Tobishimaike (飛島池), end of 7th century, copper and antimony. Japan Currency Museum.

Japan's contacts with the Chinese mainland became intense during the Tang period, with many exchanges and cultural imports occurring.[2] The first Japanese embassy to China is recorded to have been sent in 630, following which Japan adopted numerous Chinese cultural practices.[1]

The importance of metallic currency appeared to Japanese nobles, probably leading to some coin minting at the end of the 7th century,[2] such as the Tomimotosen coinage (富元銭), discovered in 1998 through archaeological research in the area of Nara.[1] An entry of the Nihon Shoki dated 15 April 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.[1]

First official coinage (708 CE)

File:Wadokaichin coin 8th century
Silver Wadōkaichin (和同開珎) coin, 8th century, Japan.

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 Wadōkaichin.[2] It was first minted in 708 CE on order of Empress Gemmei, Japan's 43rd Imperial ruler.[2] "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".[1] 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.[1] The Wadokaichin had the same specifications as the Chinese coin, with a diameter of 2.4 cm and a weight of 3.75g.[1]

Currency reform (760 CE)

File:Japan known coin types from 708 to
Known coin types of Japan from 708 to 958, chronologically arranged.
File:Japanese gold coin 760
Japanese gold coin Kaikishōhō (開基勝寶), 760 CE.
File:Kangendaiho coin 958
A Kangendaihō coin (乾元大寶) of 958 CE.

The Wadōkaichin soon became debased, as the government rapidly issued coins with progressively lesser metallic content, and local imitations thrived.[1] 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.[1]

Silver minting was soon abandoned however, but copper minting took place throughout the Nara period.[2] A variety of coin types are known, altogether 12 types, including one coin type in gold.[1]

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 as a currency medium.[1] 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.[1]

Adoption of Chinese coinage (12–17th century)

Importation of Chinese coinage

File:Bundles of 100 copper Mon
Bundles of 100 copper "Mon" coins.

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.[1] Coins were obtained from China through trade or through "Wakō" piracy.[1] Coins were also imported from Annam (modern Vietnam) and Korea.[1]

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.[1] 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 period, when a new system was put in place.

Local experiments (16th century)

[[File:|thumb|upright|Early minting experiment by the Takeda clan of Kōshū (甲州金) in the 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 Shogunate.[1]

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.[2]

A common practise in that period was also to melt gold into copper molds for convenience. 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.[1]

Tokugawa currency (17–19th century)

Main coins of Tokugawa coinage. A large ovoid gold Koban, under it a small gold Ichibuban, top right a silver Ichibuban, under it a silver Isshuban and a bronze round "Kan'ei tsūhō" Mon.

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.[1]

From 1601, Tokugawa coinage consisted in gold, silver, and bronze denominations.[1] The denominations were fixed, but the rates actually fluctuated on the exchange market.[1] 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.[2]

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.[2] This was earlier than the first goldsmith notes issued in England around 1640.[2] 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.[2] Japan thus combined gold, silver and copper standards, together with the circulation of paper money.[2]

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.[2]

Bakumatsu currency (1854–1868)

File:Bakumatsu local
Proliferation of local Japanese coinage during the Bakumatsu period.
File:Allegory of inflation during the Bakumatsu
Allegory of inflation and soaring prices during the Bakumatsu era.
File:Aratame sanbu sadame silver coin 1859
A Mexican dollar used as currency in Japan, marked with "Aratame sanbu sadame" (改三分定), 1859.

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 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").[2]

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.[2]

Modern era: Japanese yen (1871–present)

File:Daijokansatsu notes 1868
Daijōkansatsu notes (太政官札) denominated in Ryō, 1868, Japan.

Following 1868, a new currency system based on the Japanese yen 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.[2]

Birth of the yen: New Currency Act (1871)

File:Early one yen gold
Early one yen gold coin.
File:First Meiji one yen banknote
First Meiji one yen banknote, Meiji Tsūhōsatsu (明治通宝札), 1872.

Through the New Currency Act of 1871, Japan adopted the gold standard 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.[2]

Silver coins were also issued for trade with Asian countries who favoured silver as a currency, thus establishing a de facto gold-silver standard.[2]

National Bank Act (1872)

File:US dollar note and Japanese National Bank note
American banknote, and Japanese 1873 banknote closely following the US design.
File:Early one yen banknote front and
Early 1 yen banknote, front and reverse. National Bank notes, 1873.

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.[2]

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 Saigo Takamori in order to finance his war effort.[2]

In 1881, the first Japanese note to feature a portrait, the Empress Jingu note (神功皇后札), was issued.[2]

Bank of Japan (1882)

In order to regularize the issuance of convertible banknotes, a central bank, 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.[2]

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.[2] In 1899, the National Banks banknotes were declared invalid, leaving the Bank of Japan as the only supplier of currency.[2]

20th century

File:Gold standard one yen banknote 1916
Gold standard one yen banknote, 1916.
File:Various types of B Notes 1945
Various types of "B Yen" notes used by American occupation forces in 1945-1958.
A modern 2,000 yen note.

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.[2]

From 1941, Japan formally adopted a managed currency system, and in 1942 the Bank of Japan Law officially suppressed the obligation of conversion.[2]

In 1946, following the Second World War, Japan removed the old currency (旧円券) and introduced the "New Yen" (新円券).[2] 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.[3]

See also


  1. ^ a b c Metzler p.15
  2. ^ {{broken ref |msg=Cite error: Invalid tag; no text was provided for refs named {{{1|JCM}}}; see Help:Cite errors/Cite error references no text |cat=Pages with broken reference names}}
  3. ^ The internationalization of currencies: an appraisal of the Japanese yen by George S. Tavlas, Yuzuru Ozeki p.34



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