The New Taiwan dollar

Which currencies Taiwan used before the New Taiwan dollar

Spanish silver dollars and Chinese silver yuan circulated in Taiwan before the Taiwanese yen arrived in 1895. The Bank of Taiwan Kabushiki-gaisha, set up by Japan in 1899, issued the island's first paper money, silver-standard notes of 1, 5, 10 and 50 yen. Unstable silver prices pushed the Japanese government onto a gold standard in Taiwan in 1904. Shortly before its defeat in 1945, Japan shipped large quantities of yen to Taiwan, including 1,000-yen notes printed with the words Bank of Taiwan, and inflation followed.

The Ministry of Finance let the yen keep circulating after October 1945. On 22 May 1946 the reorganised Bank of Taiwan began issuing Taiwan dollars and swapped them for yen at face value. By 1948 there was a TW$10,000 note. Issue grew from an approved TW$3 billion to TW$527 billion by 14 June 1949, and TW$1.2 trillion more in sight promissory notes was losing value alongside it.

How the New Taiwan dollar was backed

The Taiwan Provincial Government reformed the currency the next day. To win back trust it promised a reserve of 100%, capped the first issue at NT$200 million and pegged the new dollar to gold and the US dollar. The cap was nearly reached by December 1949. In July 1950 the provincial government issued regulations that let circulation exceed it by NT$50 million so that production could be funded.

In 1954, with American aid resumed and output recovering, the cap became flexible. Issue could rise or fall with the gold and foreign currency the Bank of Taiwan held, the warehouse receipts it could exchange for foreign currency, and the needs of business. Every new dollar still had full reserve cover. The reserve was examined and published at regular intervals.

The Central Bank resumed operations in Taiwan on 1 July 1961. It left issuing with the Bank of Taiwan. Printing and minting passed to the Central Bank, which also stored the currency and held the reserves. That year new NT$50 and NT$100 notes appeared, when the highest note had been NT$10. People argued that big notes would feed inflation. The economy kept growing, exports soared and the financial order held.

Why Taiwan's statutes still count in silver yuan

Laws passed after 1949 kept the silver yuan as the legal currency and set it at NT$3. Many older statutes still fix fines and fees in silver yuan, at a value never updated, so the unit is notional and cannot be exchanged for silver. When the Temporary Provisions lapsed in 1991, the Republic of China had no legal national currency until regulations adopted on 26 January 2000 named the New Taiwan dollar in their second article. The Central Bank's own notes followed that July, and financial institutions withdrew every note issued in 1999 or earlier from 1 July 2002.

From the start the dollar was meant for Taiwan Province alone. The Ministry of Finance approved its use on Kinmen and Matsu and on the Dachen Islands, and the notes printed for those places said where they could circulate. The Dachen note was recalled in February 1955, after Nationalist troops withdrew from the islands.

What New Taiwan dollar notes and coins show

The Central Engraving and Printing Plant prints the notes, from engraving the dies to cutting and packing, and the Central Mint makes the coins. The series of 2000 puts Sun Yat-sen on the NT$100 and Chiang Kai-shek on the NT$200, youth baseball on the NT$500, elementary education on the NT$1,000 and the FORMOSAT-1 satellite on the NT$2,000. The NT$200 and NT$2,000 see little use. Coins run from half a dollar to NT$50, and the bimetallic NT$20 of 2001 shows Mona Rudao. At the end of 2014 NT$1,000 notes made up 80.22% of the value of currency in circulation.