History of the Japanese Currency: Getting to Know the Yen and Its Development During a Crisis

Japan with the nickname of the land of the rising sun also gets the nickname as the land of cherry blossoms, where cherry blossoms have also become the country's national flower. Japan has a lot of history, especially after the second world war.

Japan is famous for people who are considered disciplined, punctual and very perfectionists in a job. But do you know how the Japanese nation finally had the yen as their national currency and how their finances were able to get back on their feet after the second world war? Check out the full explanation in the article below!

Get to know Japanese Currency

Japanese national currency Japan calls the yen the national currency of the country, where the national currency is abbreviated as JPY. In Japan, the yen is a legal tender other than euros and US dollars.

The term "yen" which is used to refer to Japanese currency has the meaning of a circle or round object. At first the yen appeared in 1871 during the Meiji government through the New Currency Act. The presence of the yen at this time is an effort to deal with monetary problems that had occurred in Japan.

The Japanese currency that was launched at that time was in the form of 1 yen, 5 yen, 10 yen, 50 yen, 100 yen and 500 yen coins and is still in use today. However, for the Japanese yen, the government also issued new currency series such as 1.000 yen, 2.000 yen, 5.000 yen and so on.

History of Japanese Currency

In the 7th century to the mid-12th century, Japan was influenced by the Chinese social system, this influenced the emergence of Japanese currency, namely copper coins. Japanese coin currency underwent a number of changes where at the end of the 7th century Japan used Fuhon-sen coins, the 8th century to be precise in 708 Japan printed the Wado Kaichin coin. This wado kaichin coin was made by adopting a coin originating from the Tang Dynasty namely, the Kai Yuan Tong Bao coin.

The current Japanese currency is used as an effort by the government to declare the country's independence, the government also uses the prevailing coin currency to cover the costs of building palaces during the Heijo empire. Over time, the coin currency decreased, at which time there were 12 types of copper coins being produced.

The coins used are considered to be smaller in size and of lower quality due to a shortage of production materials in the form of copper. This led to the exchange of one new coin for ten old coins, resulting in a decrease in coin value. The Japanese government, which at that time had lost public confidence in the value of coins, finally used rice, silk and hemp clothing instead of coins.

To avoid the inconvenience of transporting these goods as Japanese currency, the government established a credit economy in an effort to overcome handling and transportation costs. Switching to the 12th to 16th centuries Japan suspended coin issuance and left only the torisen and shinkusen coins, although the two differed in quality. 

The public finally began to differentiate coins based on their type and quality, this condition triggered chaos in the circulation of coins and made the government take steps to use gold and silver as Japanese currency.

In the mid-19th and early 20th centuries, the Japanese government passed the New Currency Act, which changed the denominator of ryo, bu and shu to yen, sen and rin. The enactment of this Law is used to strengthen Japan's international position in building a modern monetary system.

Yen Development During Crisis in Japan

Japan uses the yen currency as a form of economic modernization that occurred during the Meiji reign in the late 19th century. Previously the regions of Japan had issued their own number of currencies, although the use of the value classification of these currencies was inconsistent.

The entry into force of the New Currency Act provided for the introduction of the yen currency in Japan. In 1882 the Bank of Japan attempted to maintain their right to print currency through monopoly control of the money supply. Japan suffered defeat during the second world war and this caused the country to experience a monetary crisis due to the war. 

Where the Japanese currency, namely the yen, lost a lot of exchange rates after the war occurred, to overcome this problem the Bretton Woods agreement was made which produced 360 yen equal to 1 USD. In 1971, the Japanese currency fell again followed by deflation and the oil crisis in 1973. 

The Japanese government is trying to overcome this by focusing on competitive exports, the Bank of Japan is still trying to maintain zero or close to zero interest rates to maintain anti-inflation policies. In 2013 the Bank of Japan attempted to target 2% inflation due to high sales volume and doubling of the money supply. At its peak in 2018, the Japanese currency, namely the yen, was declared as one of the best performing currencies of the year.

So that's an explanation of the history of the Japanese currency, starting from the introduction of the yen to the development of the yen during the crisis in Japan. Through the explanation above, you can see how the Japanese government's efforts are in overcoming financial problems in their country. Hopefully this information can be useful!