Legal currency is the abbreviation of "legal currency" or "legal currency". Legal currency is the currency that the country gives it in the form of law for forced circulation. RMB is also a legal currency.

Background of legal currency in the Republic of China:

After the outbreak of the Anti-Japanese War, the government implemented a foreign exchange control policy, and legal currency became a paper currency standard currency. Other banknotes will be withdrawn within a time limit. It also stipulated that all public and private payments must be received and paid in legal currency, the silver yuan on the market was nationalized, and one legal currency was exchanged for one silver dollar. In the early days, the legal currency was pegged to the British pound and could be exchanged unlimitedly at designated banks.

Ending:

During the Anti-Japanese War and the War of Liberation, the Kuomintang government adopted an inflationary policy and the legal currency devalued sharply. After May 1948, Weng Wenhao became the President of the Executive Office, and Wang Yunwu was appointed as the Minister of Finance. They began to plan another currency reform to replace legal tender with gold yuan notes.

On August 18, 1948, the government ordered the implementation of currency reform, replacing legal tender with gold yuan notes, and forced the exchange of gold, silver and foreign currencies into gold yuan notes. However, hyperinflation caused by excessive issuance caused a large number of urban middle class to go bankrupt.

Extended information

The legal tender issued by the National Bank and guaranteed by the national credit decoupled the currency from the precious metals whose prices fluctuated. It was a progressive financial system reform in China at that time. , which is also a characteristic of a modern country’s financial system. The issuance of legal currency unified the domestic currency, and the control of currency issuance fell into the hands of the government. Domestic hard currencies such as silver were therefore concentrated in the hands of the government.

Legal currency refers to currency that does not represent actual commodities or goods, and the issuer has no obligation to redeem the currency into physical objects; it only relies on government decrees to make it legal currency. The value of fiat currency comes from the owner's belief that the currency will maintain its purchasing power in the future. Currency itself has no intrinsic value. When banknotes are produced, legal tender is essentially banknotes that can be circulated according to the law.

The legal currency of the People's Republic of China is RMB. The People's Bank of China is the national competent authority for the management of RMB and is responsible for the design, printing and issuance of RMB.

Baidu Encyclopedia - Legal Currency