CHINA / Backgrounder
Renminbi - RMB
(answers.com)
Updated: 2006-09-29 09:14
The renminbi (literally "people's currency") or the yuan is the official
currency in the mainland of the People's Republic of China (PRC). It is
issued by the People's Bank of China, the monetary authority of the PRC.
The official ISO 4217 abbreviation is CNY, although also commonly
abbreviated as "RMB". The Latinised symbol is , while in Chinese it is
usually written with the character.
History
The renminbi was first issued shortly before the takeover of the mainland
by the Communists in 1949. One of the first tasks of the new communist
government was to end the hyperinflation that had plagued China near the
end of the Kuomintang era. A revaluation occurred in 1955 at the rate of
1 new yuan =10,000 old yuan.
During the era of the command economy, the value of the RMB was set to
unrealistic values in exchange with western currency and severe currency
exchange rules were put in place. With the opening of the mainland
Chinese economy in 1978, a dual track currency system was instituted,
with renminbi usable only domestically, and with foreigners forced to use
foreign exchange certificates. The unrealistic levels at which exchange
rates were pegged led to a strong black market in currency transactions.
In the late 1980s and early 1990s, the PRC worked to make the RMB more
convertible. Through the use of swap centers, the exchange rate was
brought to realistic levels and the dual track currency system was
abolished.
The RMB is convertible on current accounts, but not capital accounts. The
ultimate goal has been to make the RMB fully convertible. However, partly
in response to the Asian financial crisis in 1998, the PRC has been
concerned that the mainland Chinese financial system would not be able to
handle the potential rapid cross border movements of hot money, and as a
result, as of 2003, full convertibility remains a distant goal.
Renminbi units
The base unit of the renminbi is the yuan. As with Chinese numerals, this
character has two forms -- a common simplified form () and a formal form
() used to prevent alterations and accounting mistakes. One yuan is
divided into 10 jiao (), and one jiao is divided into 10 fen (). So 3.45
yuan would be spoken of as "3 yuan 4 jiao 5 fen", as opposed to "3 yuan
45 fen". In colloquial usage, other names are frequently employed; see
yuan for details.
The largest denomination of the renminbi is the 100-yuan note. The
smallest is the 1-fen coin or note. One of the more interesting things to
note is that all denominations are available as banknotes. The fen notes
are now rather insignificant, and the design has not changed since 1953.
The word yuan is the usual translation for the word dollar, and the
abbreviation RMB�� is sometimes written as CN$.
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