Abstract：This article discusses monetary thought in ancient China from the perspective of more modern Western monetary theory. It sets out the structure of economic activity in the various dynasties of ancient China and emphasizes the differences in monetary structure from Europe (and later North America). Imperial China was a politically integrated structure with regional segmentation of economic activities and hence with regional money. In various regions different forms of money circulated, with gold, silver, copper, and paper all present at various times. Monetary policy was guided by monetary thought, as later in Europe. Basic concepts such as monetary function, the velocity of circulation, inflation, interest rate parity and the quantity theory were all part of debate. Monetary policy was one body conducted at regional level, but overseen nationally politically before national integration under the Ming dynasty (14th century). The economies of Imperial China witnessed boom and bust, inflation and deflation and monetary control much like in Europe to follow later. Chinese monetary thought seemingly preceded Western thought, but had remarkable similarities. Whether much of this thought travelled down the silk road remains unknown, but the possibility is discussed in Chinese research circles.
The European Financial Review, February - March 2011:49-53
