During this period, China's monetary system underwent a series of changes. One of the most significant changes was the fiat currency reform that was introduced in 1935. This reform abolished the original silver standard system and adopted a new monetary system, the fiat currency system. So, why is the ** period called fiat currency?
Fiat currency is the name of the currency in circulation in old China from November 4, 1935 to August 19, 1948.
First of all, we need to understand the background of the fiat currency system. In the early days, China's monetary system was mainly the silver standard, that is, the standard and standard of the currency. However, due to the limited production of the first and the largest fluctuations in the international market, there have been many problems in China's monetary system. Especially in the 30s of the 20th century, due to the impact of the world economic crisis, China's silver standard system was in a predicament. In response to this situation, the people decided to carry out a reform of the monetary system.
In the process of reform, the people have drawn on some advanced international experience and combined with China's actual situation to formulate a new monetary system, that is, the legal tender system. The system is based on national credit, using paper money as the main form of currency, and **, foreign exchange, **, etc. as reserves. The advantage of this system is that it is no longer limited by the amount of output, and at the same time, it can control the amount of money by adjusting the proportion of reserves, so as to maintain the stability of the currency.
So why is this new monetary system called "fiat money"? This is mainly because the term "fiat currency" has a legal connotation, i.e., this currency is legally prescribed and guaranteed by national law. Under the fiat currency system, the issuance and circulation of paper money are strictly regulated and controlled by law, thus ensuring the stability and reliability of the currency. In addition, the term "fiat currency" also implies that this currency has a legal status and value, and is a manifestation of the country's credit.
In addition to the legal implications, the term "fiat currency" also has a certain historical origin. In ancient China, money came in a variety of forms, including cloth, metal, and shells. The earliest banknote, "Jiaozi", appeared in the Northern Song Dynasty. At that time, the "Jiaozi" was issued and guaranteed by the state, so it was also called "Guanjiaozi" or "Fajiaozi". It can be seen that the word "fiat currency" has a certain connection and inheritance relationship with the ancient "law jiaozi".
In general, the new monetary system was called "legal tender" during the ** period, mainly because it was a monetary system based on national credit and regulated and controlled by law. Such a system is not only stable and reliable, but also reflects the authority and dignity of the country's credit. At the same time, the term "fiat currency" also implies that this currency has a legal status and value, which is an important change in China's monetary system.