Ancient Times Latter half of the 7th century - Middle of the 12th century

From the end of the seventh century to the eighth century, Japan introduced various social systems from China (Tang Dynasty) in order to build a centralized government based on the “ritsuryo” code. During this process, coins modeled after Chinese ones were issued. Three types of copper coins were minted in the Nara period (eighth century), including the Wado Kaichin coin, and nine types in the Heian period (from the end of the eighth century). However, Japan subsequently suspended the mintage and circulation of coins.

Latter half of the 7th century Coins used before the mintage of Wado Kaichin

An archaeological survey conducted at the Asukaike Ruins in 1998 revealed that coins known as Fuhon-sen had been minted in the latter half of the seventh century. From the ruins, Fuhon-sen coins were unearthed together with the molds, pots and other instruments used to mint them.

The Fuhon-sen coin is thought to be the coin referred to in the following rescript mentioned in the Nihon Shoki (written in 683): “From now on, use the copper coins instead of the silver coins.”
The silver coins mentioned in the above rescript are thought to be the Mumon Gin-sen coins, which were unearthed at 15 or more sites in Japan (located primarily in the Kinki area).

Beginning of the 8th century Issuance of Wado Kaichin

The ritsuryo code-based government, while actively assimilating social systems and culture from China, minted the Wado Kaichin coin in 708, which was modeled after the Kai Yuan Tong Bao coin of the Tang Dynasty. The mintage was regarded as an essential tool for the Japanese government to display the independence and the authority of the nation, both inside and outside the country. The government strived to expand the use of the coins through various measures such as rewarding those who had saved a large number of coins with a court rank.

The government used the coins to cover the costs of building the Heijo imperial palace. Face value of the coins was higher than the actual value of the metal they were composed of; therefore the government could earn seigniorage from the mintage.

From the 8th to 10th centuries Decline in the usage of coins

The ritsuryo code-based government minted 12 kinds of copper coins, including the Wado Kaichin. The coins became smaller in size and lower in quality (lead content increased due to a shortage of copper) over time and the exchange rate was set at one new coin for 10 old coins. This resulted in a rapid decrease in the value of the copper coins, and people subsequently lost faith in the value of the coins. The government suspended minting copper coins in the mid 10th century; the last coin was called the Kengen Taiho minted in 958.

The Naganobori copper mine (presently located in Yamaguchi Prefecture), is believed to be one of the largest copper production sites of ancient Japan. From 9th century, its copper production began to decrease, while the production of lead increased.

From the 11th century to the middle of the 12th century Use of commodity money

After the mintage of copper coins in the mid 10th century, coin circulation was suspended, and rice, silk and (hemp) clothes, which all maintained stable value, began to be used as a substitute for the coins. These products gained commodity money status, as they became stable criteria to evaluate the monetary value of various goods.

Because carrying around rice, silk and (hemp) clothes as currency was inconvenient, a credit economy emerged to save handling and transportation costs. Government offices in the capital issued payment orders to rice warehouses under their jurisdiction, and these documents played the role of present-day checks.

Medieval Times Middle of the 12th century - First half of the 16th century

A large quantity of Chinese copper coins began to flow into Japan in the middle of the 12th century. These coins were widely circulated among Japanese people, and promoted the commodity economy. The Japanese government suspended the issuance of coins until the 16th century, leaving the people with only the Chinese coins (toraisen) to use. To address the increased demand for coins, however, privately minted Japanese coins (shichusen) were also circulated, but the quality of these coins differed by type. People began to classify these various coins by type or quality (the practice known as “erizeni”). As the result, “erizeni” caused confusion in the nation’s coin circulation. After the inflow of coins from China was disrupted in the latter half of the 16th century, rice, gold and silver began to be used as money.

From the middle of the 12th century to the 13th century Inflow and spread of the use of coins

In the middle of the 12th century, following the inflow of coins from China to Japan, the Chinese coins began to be used as currency in Japan (with one coin given a value of one mon) 1). In the 13th century, the use of the coins spread among the people and the Kamakura Shogunate government and imperial court, which initially disapproved their use, eventually accepted the use of the coins. The coins thus replaced commodity money, such as rice, silk and (hemp) clothes.

In the 13th century, people began to pay annual taxes with coins, and the products that had been submitted as taxes began to be traded in local markets, leading to the development of a commodity economy.

1) Chinese coinage and outflow of coins from China:
The Northern Song Dynasty (10th to 12th centuries) minted the largest numbers of coins among all the Chinese dynasties. After the fall of the dynasty, large numbers of the coins flowed out of the country to Japan and other regions. Following this, in the latter half of the 13th century, as the Yuan Dynasty (13th to 14th centuries) prohibited the use of coins and promoted the use of paper money as the major form of currency, large amount of coins flowed out of China.

From the 14th century to the latter half of the 15th century Development of the commodity economy and an increase in demand for coins

In the Kinki area and the transportation hub cities, local specialties began to be traded, bringing wealth to some merchants (utokunin) and transporters (toimaru). With the development of the commodity economy, the demand for coins increased. The Muromachi Shogunate government imported coins from China (Min Dynasty); however, the inflow of coins was lower compared to the level seen in the 13th century 2). From the latter half of the 14th century, an increasing number of people began to stock coins in large numbers.

Because of the increased demand for coins and a decrease in the inflow of coins from China, people began to mint coins privately, which were modeled after the Chinese ones.
In the first half of the 14th century, Emperor Godaigo planned to mint the Kenkon Tsuho coin; however, his plan was not implemented due to the failure of the Kenmu Restoration.

2) Chinese coinage and outflow of coins from China:
The Min Dynasty (14th to 17th centuries) initially used both coins and paper money, but did not mint coins in large numbers. The dynasty also limited foreign trade to tributary trade, resulting in a decrease in the outflow of coins from the country.

From the latter half of the 15th century to the first half of the 16th century Erizeni

In the latter half of the 15th century, demand for coins further increased due to the development of commercial transactions. Because of the poor quality of coins imported from China and privately minted coins in Japan (in Sakai, Hakata, and other local cities) that were modeled after Chinese ones, people began to classify coins according to their type and form 3). As a result, the “1 copper coin = 1 mon” principle, which had prevailed stably during medieval times, collapsed, and the value of coins came to differ according to their type all over the country. After looking at the chaotic coin circulation situation, the government and feudal lords repeatedly issued orders to prohibit the selecting of coins (erizeni) to ensure that coins were smoothly circulated. Credit transactions were developed following the spread of the use of money in daily transactions. From the early 14th century to the early 16th century, bills known as “saifu” were used for the transfer and payment of funds between remote areas. Most bills had a value of 10 kanmon (10,000 copper coins) and they were circulated among the general public.

3) Chinese coinage and outflow of coins from China:
In the middle of the 15th century, poor-quality coins were privately minted in the south-eastern part of China, and the erizeni practice subsequently began. Privately minted coins flowed out of the country to Japan together with Min Dynasty coins.

Early Modern Times Middle of the 16th century - First half of the 19th century

In the 16th century, gold and silver coins were minted following active mine developments by feudal warlords. Oda Nobunaga fixed the exchange rates between gold, silver and copper coins, and Toyotomi Hideyoshi ordered the mintage of gold and silver coins, including Tensho Oban gold coins. Tokugawa Ieyasu increased his control over gold and silver mines, secured mintage technology and systems, and issued Keicho silver and gold coins in 1601. The Tokugawa Shogunate government subsequently issued Kan'ei Tsuho copper coins, within the process of establishing a unified monetary system called the “tri-metallic monetary system,” based on gold, silver and copper coins. The tri-metallic monetary system was significant because it was a unique monetary system based on the standardized currencies introduced by the central government. The tri-metallic monetary system was a relaxed unification system, which allowed local feudal lords to issue currencies other than the three standardized ones, such as clan notes to be circulated within their territories.

In the latter half of the 18th century, the demand for small-denomination currency increased due to expanded production of commercial crops in local villages. The Tokugawa Shogunate government issued silver coins (Meiwa Nanryo Nishu-gin <2-shu-gin>) with denominations based on gold coin units. Thus, the silver coins eventually became supplementary currencies of gold coins.
Toward the end of the Edo period, recoinages (Bunsei and Tenpo recoinages) were often carried out to finance the budget deficits of the Shogunate government, which led to chronic inflation.

From the middle to late 16th century Disruption of the inflow of coins from China and the appearance of gold and silver coins

In the latter half of the 16th century, the inflow of Chinese coins was disrupted, leading to a decrease in the circulation of coins 4). In the 1570s in western Japan, rice was used instead of coins to settle large transactions like real estate. Warlords actively developed mines, and minted silver and gold coins for large transactions and for military funds, including Sekishu-gin silver coins and Koshu-kin gold coins.

At the Iwami silver mine, a new refining technology known as “cupellation” was introduced ahead of other mines in Japan. The silver produced from this mine was exported overseas. The Koshu-kin gold coins were issued based on the currency units ryo, bu and shu, adopting the quaternary numeral system, and these units continued to be used for gold coins during the Edo period.
4) Chinese coinage: In the 16th century, silver coins played an exclusive role in Chinese coinage and the production of privately, as well as officially, minted coins was stopped, which led to a suspension of the outflow of Chinese coins to Japan.

Latter half of the 16th century Spreading use of gold and silver coins

Oda Nobunaga and Toyotomi Hideyoshi aimed to establish a monetary system as a means to exercise control over the whole nation. Nobunaga issued an order to prohibit coin selecting (erizeni). In the order, he mandated the use of gold and silver coins for transactions of expensive goods, and fixed their exchange rates against copper coins. Hideyoshi took over direct control of mines throughout the country and minted the standard coins, including Tensho Oban gold coins.

Oban gold coins were used in ceremonies as rewards or gifts among samurai families. These practices lead gold coins to gain official currency status.

17th Century Unification of gold, silver and copper coins

Tokugawa Ieyasu placed the mines under his direct control and promoted the improvement of the mintage technology for the establishment of gold and silver mints known as “kobanza” and “ginza.” In 1601, he issued Keicho gold and silver coins minted in standardized types, fineness and shapes. Regarding copper coins, although those circulated before the Edo period had been used for some time, Kan’ei Tsuho was minted in 1636 to ensure a stable supply. Initially, the Tokugawa Shogunate government commissioned the mintage of these coins to copper mints (“zeniza”) across the country with fixed-term licenses.

The Tokugawa Shogunate government issued gold, silver and copper coins as forms of currency that held independent value. Gold coins (Koban, Ichibu-kin, etc.) were issued as currencies with denomination, while silver coins (Cho-gin, Mameita-gin, etc.) were issued as currencies by weight. As for copper coins, one coin was denominated as one mon.

Official exchange rate: 1ryo of gold = 50 monme of silver = 4,000 mon of copper
Gold coin (Koban): 1 ryo = 4 bu = 16 shu
Silver coin: 1 monme (≒3.75g) = 10 fun,
1,000 monme=1kan
Copper coin: 1,000 mon = 1 kanmon

17th century Appearance of paper money and circulation of clan notes (hansatsu)

Around the year 1600, a priest and merchant in the Ise Yamada area (present day, Mie prefecture) issued the Yamada Hagaki check as a deposit receipt for small change to be paid in exchange for silver coins traded by weight, and this check was circulated as currency in the local area. Subsequently, merchants mainly in the Kinki area began to issue private checks, and the clans mainly in western Japan also began to issue hansatsu notes as a means to finance their deficits and cover the shortage of small-denomination currency issued by the government.

In order to circulate standardized coins all over the country, the Tokugawa Shogunate government endeavored to prevent the circulation of hansatsu notes by prohibiting their use, granting fixed-terms for issuing licenses, or by limiting the type that could be used to only the silver denomination type. However, these measures proved to be ineffective. At the end of the Edo period, nearly 80% of the clans had issued hansatsu notes, resulting in severe inflation. Due to the shortage of small-denomination currency, hansatsu notes issued by powerful merchants under the commission of clans were circulated even beyond the clan boundaries.

From the end of 17th century to the first half of the 18th century Genroku and Hoei recoinages

The Tokugawa Shogunate government carried out recoinages (Genroku recoinage in 1695, Hoei recoinage from 1706 to 1711) to debase gold and silver coins in order to increase the money in circulation and to improve the government’s fiscal situation. These measures brought a large amount of seigniorage to the government, but the increased money circulation caused inflation.

The government established recoinage offices, inviting workers from gold and silver mints. After the Genroku recoinage, the kobanza gold mint began to be called kinza.
Official exchange rate: 1 ryo of gold = 60 monme of silver = 4,000 mon of copper

First half of the 18th century Shotoku and Kyoho recoinages

To cope with inflation caused by the Genroku recoinage, another recoinage (Shotoku regoinage) was carried out in 1714 to increase the gold fineness according to a proposal made by Arai Hakuseki, a Confucian adviser to the Shogun. The fineness of Shotoku Koban gold coins was set at the same level as Keicho Koban gold coins of the early 17th century. This resulted in a sharp reduction of money in circulation, causing stagnancy in economic activities and a decline in commodity prices.

The government, however, further increased the fineness of Kyoho Koban gold coins in 1715, the year after the Shotoku recoinage. Of all recoinages that were carried out in the Edo period, only the Shotoku and Kyoho recoinages resulted in increased gold and silver fineness.

Middle of the 18th century Genbun recoinage

The Tokugawa Shogunate government conducted yet another recoinage (Genbun recoinage; debasement of gold and silver coins) in 1736 to deal with a drop in rice prices caused by the Shotoku and Kyoho recoinages through increasing the circulation of gold and silver coins. This resulted in improvement in the economic condition. The Genbun Koban gold coins continued to be circulated stably for the next 80 years.

The Genbun recoinage, or the debasement of high-quality Shotoku gold and silver coins, was conducted not to increase the government's income, but to solve social problems.
In the Genbun era of the Edo period, many copper coins were minted within a short period of time. After the mintage of the Kan'ei Tsuho iron coin in 1739, the use of iron coins became mainstream. In the middle of the 18th century, in order to control the amount of circulation of these coins, the government began to permit their mintage only in those mints that were under the government's supervision.

Middle of the 18th century to the 19th century Appearance of silver coins with denominations

In 1765, the Tokugawa Shogunate government issued silver coins with fixed weight (Meiwa Gomonme-gin <5 monme-gin> silver coins) to be exchanged at an official exchange rate of 1-ryo of gold for 60 monme of silver, and subsequently in 1772, issued Meiwa Nanryo Nishu-gin silver coins with denominations based on gold coin units. The government promoted the use of the coins by proactively making loans to moneychangers (ryogaesho), and in the first half of the 19th century, silver coins with denominations were circulated all over the country.

The Gomonme-gin silver coin carried the fixed denomination of “5 monme,” and moneychangers, who had been earning profits from fluctuations of exchange rates in the market, strongly objected to use these coins. On the obverse of the Meiwa Nanryo Nishu-gin silver coin, it was indicated that eight Nanryo Nishugin silver coins could be exchanged for one 1-ryo Koban gold coin. In line with the government’s policy, the coins began to be circulated widely as supplementary currencies of Koban gold coins, since it was more convenient to use silver coins with denominations rather than those traded by weight. In 1768, the Kan’ei Tsuho Yonmon (4 mon)-sen brass coin was minted, which carried a wave pattern on the back. From the end of the Edo period to the Meiji period, Yonmonsen iron coins were also minted in large numbers.

First half of the 19th century Bunsei and Tenpo recoinages

The Tokugawa Shogunate government carried out the Bunsei and Tenpo recoinages in 1818 and 1832, respectively, to debase the gold and silver coins in order to compensate for fiscal deficits.Official exchange rate was set at 1 ryo of gold = 60 monme of silver = 6,500 mon of copper. The recoinages, however, caused confusion in the monetary system and increased commodity prices. The government also minted Tenpo Tsuho Hyakumon (100 mon)-sen and Tenpo Goryo (5 ryo)-ban coins to cover fiscal deficits.

The Tenpo Tsuho 100-mon-sen coins (1835) were minted in large numbers; however, the amount of material used for the mintage of each of these coins was almost the same as that used in five and a half Kan’ei Tsuho 1-mon-sen coins, which caused chronic rises in commodity prices. The amount of gold contained in one Tenpo 5-ryo-ban (1837) coin was equivalent to the total amount of gold contained in four and a half of the 1-ryo Tenpo Koban gold coins. This new, low-quality coin was badly received among the people, and the mintage was soon suspended.

Modern Times Middle of the 19th century - First half of the 20th century

Middle of the 19th century, after the re-opening of international trade at the end of the Edo period, Japan experienced a huge outflow of gold coins overseas, and the Man’en recoinage, which was carried out to stop this outflow, caused further inflation, resulting in confusion of the nation’s monetary system toward the Meiji Restoration.

The Meiji government implemented measures to develop modern industries and to increase military strength (known as the "Fukoku Kyohei" policy), in order to strengthen Japan to the same level as Europe and America. To this end, the government needed to establish a modern monetary system. Accordingly in 1871, the government enacted the "New Currency Act" to change the currency units from traditional "ryo" "bu" and "shu" to "yen" "sen" and "rin." In 1881, Masayoshi Matsukata became finance minister and insisted on the need to establish a central bank. The Bank of Japan was established in October 1882.

Middle of the 19th century Currency and the conclusion of Ansei five-power treaties

In 1858, Japan concluded treaties of amity and commerce with the United States, the United Kingdom, Russia, the Netherlands and France (known as “unequal treaties”). The treaties stipulated that “in principle, all coins of the same type shall be exchanged based on their weight regardless of their metal fineness.” In 1859, the Tokugawa Shogunate government, wanting two Nishu (2 shu)-gin silver coins to be exchanged for one Mexican silver dollar coin, minted Ansei Nishu (2 shu)-gin , which had higher silver fineness than Tenpo Ichibu (1 bu)-gin, on the day before the opening of the ports. However, the United States objected to the plan and the exchange rate was fixed at one Mexican 1-dollar silver coin for three Ichibu-gin coins.

Of the foreign silver coins used in world trade, those brought into Japan were primarily from Mexico.
Under the Japan-U.S. Treaty of Peace and Amity (1854), the exchange rate was decided at one Mexican 1-dollar silver coin for one Ichibu-gin coin. However, Townsend Harris, first American envoy in Japan, insisted on the aforementioned exchange principle, and the rate was fixed at one Mexican silver dollar coin for three Ichibu-gin coins.

Latter half of the 19th Century The massive outflow of gold coins, and the Man'en recoinage

During this time in Japan, one gram of gold could be exchanged approximately for five grams of silver, while in foreign countries, one gram of gold could be exchanged for approximately 15 grams of silver. As the value of gold in Japan was much lower compared to the overseas market, a large number of gold coins flowed out of the country. In 1860, the government decreased the gold fineness to one-third its previous level in the Man’en recoinange in order to adjust the gold-silver parity to that of the international level. Eventually, further outflow of gold coins overseas was prevented.

Foreign merchants exchanged four Mexican silver coins for 12 ichibu-gin silver coins and then exchanged the 12 coins for three Koban gold coins in Japan. Outside Japan, again, they exchanged the 3 Koban gold coins for 12 Mexican silver coins.

To stop the outflow of gold coins from Japan, the government minted Man’en Nibu (2 bu)-kin gold coins. As the gold coins were issued in large quantity to cover fiscal deficits, this resulted in sharp inflation

Latter half of the 19th century from 1868 to the first half of the 1870s Currency system established by the Meiji government—Birth of the yen

The Meiji government initially allowed the circulation of gold, silver and copper coins, and also clan notes (hansatsu) used in the Edo Period, and the government themselves issued "ryo"-based coins and notes. To reform the confusing monetary system, the government enacted the "New Currency Act" in 1871 to adopt the new currency units "yen" "sen" and "rin" based on the decimal system, and issued new gold, silver and copper coins using Western manufacturing technology.

Based on the New Currency Act, the gold standard system was adopted (1.5 g of gold= 1 yen, and 1 yen = 100 sen = 1,000 rin).
The government issued paper money such as Dajokan-satsu and Meiji Tsuho-satsu notes.
Due to the lack of gold and silver in Japan, however, the issued government notes were not exchangeable for gold or silver coins.

Latter half of the 19th century the latter half of the 1870s Issuance of "national bank" notes and a decline in the value of paper money

In order to collect the inconvertible government notes and to supply funds for the development of modern industries, the Meiji government enacted the "National Bank Act" in 1872 allowing private banks to issue convertible banknotes. According to the law, banknotes were issued by private banks called “national banks,” but following the revision of the law in 1876, the banknotes became inconvertible.

The government additionally issued inconvertible notes to cover the cost of the Seinan Civil War (1877). This caused a sharp decrease in the value of paper money and the public lost trust in those notes.

Latter half of the 19th century the 1880s Birth of the Bank of Japan

In 1881, Masayoshi Matsukata was inaugurated as finance minister, and he implemented measures to solve the declining value of paper money caused by the excessive issuance of inconvertible notes. He absorbed inconvertible notes in circulation using the surplus brought by fiscal austerity. In order to establish both a convertible banknote system and a modern monetary and financial system, he also made preparations for the founding of a central bank, and the Bank of Japan began operating in October 1882.

The Bank of Japan issued its first note (Daikoku-satsu) in 1885, two and a half years after its opening, following recovery of the value of paper money. The notes were initially exchangeable for silver coins, which were used as specie money in Japan. The minister wanted to establish a gold standard system like other major Western countries, but because Japan reserved silver coins as specie money, the country adopted the silver standard system.
The Bank of Japan notes were circulated smoothly, while circulation of notes issued by "national banks" and government were invalidated at the end of 1899.

From the end of the 19th century to the beginning of the 20th century(from the 1890s to the 1910s) Establishment of the gold standard system

Major Western countries shifted from the silver standard system to the gold standard system in the latter half of the 19th century. In 1897, Japan enacted the “Currency Act” to introduce the gold standard system, and stipulated that 0.75 g of gold was equivalent to one yen. The government used reparations paid from China following the Sino-Japanese war as the gold reserve. Through establishing the gold standard system, Japan was integrated into the global economic and financial system.

In 1897, the convertible Bank of Japan notes, which had been exchangeable for silver coins, were revised to be exchangeable for gold coins.

During the economic boom of the World War I(1914-1918), demand for Bank of Japan notes increased.

First half of the 20th century the 1920s Outbreak of the financial crisis

After the end of World War I, as European countries gradually recovered from the damage caused by the war, exports from Japan decreased, resulting in an economic downturn. To make matters worse, in 1923, the Kanto region was hit by a mega-earthquake, which also imparted serious damage to Japan’s economy. Amid these events, in March 1927, the country faced a financial crisis.

The Bank of Japan issued a large number of banknotes in an effort to mitigate the worries of depositors. Meanwhile, the government declared a three-week moratorium.

Worried depositors, however, rushed to banks to withdraw their money resulting in a shortage of Bank of Japan notes. In response, the Bank of Japan quickly printed and issued 200-yen notes, leaving the back side of the notes blank in their haste.

First half of the 20th century the 1930s From the gold standard system to the managed currency system

The stock plunge that began on Wall Street in New York in 1929 caused the world financial crisis, forcing the United Kingdom to abandon the gold standard system in September 1931. Other European countries followed this movement, and Japan also stopped the exchange of banknotes for gold coins in December of the same year. Subsequently in 1942, the Bank of Japan law was promulgated and the country formally shifted its monetary system to the managed currency system, which continues to this day.

Under the managed currency system, Bank of Japan notes were no longer exchangeable for gold coins and the issuance of banknotes was controlled by the central bank.

The “convertible” statement printed on the obverse side of the banknote was deleted, and the Bank of Japan notes became inconvertible.