5 Things: The Renminbi

By That's PRD, January 20, 2015

For this week’s 5 Things we decided to look at those colorful notes that pack your wallet - the Renminbi (RMB). It plays an integral role in your day-to-day life, but there is probably a lot you don’t know about it.

To shed some light on the RMB we spoke with Dion Thomas, who holds an MA in International Economic Policy from American University in Washington DC.

1. There is a great deal of it

While hard money inflationistas, (yes, they are still around, they’re just a little bit quieter these days) rail against “Helicopter Ben’s” post-Financial Crisis expansion of the US money supply as the death of the dollar, many seem unaware that the Chinese Central Bank has been far more prodigious in recent years. In the years following the financial crisis, China has unleashed a torrent of new currency, peaking in 2012 when just about half of new money creation came from China.

2. You might get stuck with it

While China has been moving toward full convertibility, there are still stringent regulations on how much RMB you can exchange if you ever decide to leave China. Under the current laws, foreigners are allowed to exchange USD500 per day, so if you’re planning to sell your house and take the profits home, expect a long stay.

3. It is one of the most traded currencies in off-shore markets

A lack of convertibility may reduce official international transactions (the international Bank of Settlements ranks it ninth in international trading volume) but the RMB has been soaring in off-shore markets. The volume of RMB traded on the Thompson Reuters trading platforms rose 350 percent in 2014 and rival platform EBS now ranks it in the top five globally.

4. It hasn’t always been about Mao

While Chairman Mao is currently the only Chinese leader pictured on the RMB, it hasn’t always been this way. Back during the relatively liberal political atmosphere of the 1980’s, monetary authorities designed and issued a RMB100 bill that featured Mao sharing the limelight with alternate fan favorites Zhou Enlai, Liu Shaoqi, and General Zhu De.

5. There once was a RMB3 bill

In the early days of the People’s Republic, monetary authorities once issued a RMB3 note. Printing of the RMB3 bill was later outsourced to the Soviet Union, and then discontinued. If you come across one these days, it can fetch prices up to RMB48000 from collectors.

// To see more from our 5 Thing series, click here.