¶ … currency of the Qing Dynasty and why precisely the failure happened. It is reasonable to presume that the government made some mistakes when it came to their fiscal and monetary policies. Given that, there are surely some solutions that would emerge that could have been used to prevent that failure. Also important to consider is how the monetary policy and solutions regarding the same compare to paper money within the governments of the West. In light of things that have happened or could happen, which could include bank runs, faulty monetary policy and so forth, these are important questions. While the monetary policies of the East and China are good to look at, the same holds true for the paper money history and policy of the West. Analysis

At the beginning of the Qing dynasty, the monetary system was bimetallic and consisted of two types of money. One is yinliang and the other is tongqian. After the Opium War, paper money was issued and used by the Qing Dynasty so as to help deal with the financial crisis that was under way at the time. However, these efforts failed and for a couple of reasons. First, the Chinese had to pay about 21 million silver dollasr to the British. Combine with the fact that the Qing Dynasty ignored liquidity issues in the economy, the shift to paper money did not have the desired effects. The lack of proper budget calculations and the issuing the large amounts of paper money led to bankruptcy.

The complex and differing types of paper money led to a reshuffling of the order of currency...

Complicating the matter was that foreign countries issued different currencies for the Chinese market. This led to more than one prevailing currency in the Chinese market and this made things even worse since business and government operations and actions would commonly involve more than one currency. Private businesses in particular made things even more nebulous and complex because they issued their own paper money on top of what was already flowing through the system. This confused the consumer and there was also a large amount of counterfeit money in the system.
In the later part of the 19th century, foreign imperialist countries invaded China and set up banks and issued paper money of their own. Different values and weights with the different coins and paper notes that emerged caused confusion in the market. Indeed, it is really hard to compare different values between coins and paper money. It also caused another economic problem, that being the unstable value of the coins that were being exchange and used. As the government printed more paper money, the value of paper money would fall lower and lower. This was typified by a general increase in prices and fall in the purchasing value of money. Inflation caused the government to lose of the market. This in turn lost their credit from people. People tried hard to trade off the silver money when the inflation affected the value of…