The forerunners of today’s banking industry first emerged in China during the Song Dynasty (960-1279).
Conducting banking functions including the acceptance of deposits, the making of loans, issuing notes, money exchange, and long-distance remittance of money, these early banks were called the piaohao and were primarily owned by natives of Shanxi Province.
The first piaohao originated from the Xiyuecheng Dye Company of Pingyao. To transfer large amounts of money from one branch to another, the company introduced drafts, cashable in the company’s branches around China.
Although the method was originally designed for business transactions within the Xiyuecheng Company, it became so popular that in 1823 the owner gave up the dye business and reorganised the company as a remittance firm, Rischengchang Piaohao.
In the next thirty years, eleven piaohao were established in Shanxi Province, in the counties of Qixian, Taigu, and Pingyao. By the end of the nineteenth century, thirty-two piaohao with 475 branches were in business covering most of the nation, the forerunners of China’s modern banking system.
Today, the People’s Bank of China is the central bank of the People’s Republic of China, with the power to control monetary policy and regulate financial institutions in mainland China. The bank has more financial assets than any other single public finance institution in recorded history.
China’s foreign exchange reserves hit a record $US1.95 trillion at the end of 2008, the largest in the world.
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