FORTUNE MAGAZINE
Inside China’s drive for digital currency dominance
In the 13th century, Kublai Khan, the Mongolian emperor who founded China’s Yuan Dynasty, upended monetary convention with a magisterial edict: Accept my money, or die.
The threat of execution was not so novel back then, of course. The Khan’s true innovation lay in his refashioning of money itself. The grandson of fearsome Genghis realized he could finance his realm untethered to finite supplies of precious metals. No longer would his geopolitical reach depend on backbreakingly mined and smelted ores hauled along the Silk Road. Instead, he could tap a boundless, lightweight resource—and make money grow on trees.
Mulberry trees, to be exact. In a contemporary account, Marco Polo, the wandering merchant of Venice, marveled at “how the great Khan causeth the bark of trees, made into something like paper, to pass for money overall his country.” The banknotes were issued, he wrote, “with as much solemnity and authority as if they were of pure gold or silver.”
Medieval Europeans were dumbfounded by Polo’s report. But the emperor was ahead of his time. Fiat currencies—descendants of Kublai Khan’s chao, backed by government edict rather than hard assets—are standard everywhere today.
The threat of execution was not so novel back then, of course. The Khan’s true innovation lay in his refashioning of money itself. The grandson of fearsome Genghis realized he could finance his realm untethered to finite supplies of precious metals. No longer would his geopolitical reach depend on backbreakingly mined and smelted ores hauled along the Silk Road. Instead, he could tap a boundless, lightweight resource—and make money grow on trees.
Mulberry trees, to be exact. In a contemporary account, Marco Polo, the wandering merchant of Venice, marveled at “how the great Khan causeth the bark of trees, made into something like paper, to pass for money overall his country.” The banknotes were issued, he wrote, “with as much solemnity and authority as if they were of pure gold or silver.”
Medieval Europeans were dumbfounded by Polo’s report. But the emperor was ahead of his time. Fiat currencies—descendants of Kublai Khan’s chao, backed by government edict rather than hard assets—are standard everywhere today.
Fast-forward to this century, and China once again is remaking money. Except this time, it is paper currency that’s getting tossed; China is going digital. And while things didn’t end well for the Mongols—they printed themselves into hyperinflation, and lost the throne—China’s current leaders have something far more stable and enduring in mind.
(o resto do artigo só para assinantes: https://fortune.com/2020/08/10/china-digital-currency-electronic-yuan-bitcoin-cryptocurrency/ )
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