Wednesday, May 1, 2013

Why China doesn't mint currency larger than 16 USD

Chinese authorities refuse to print any bill larger than the 100-renminbi note. That’s equivalent to $16. Since 1988, the 100-renminbi note, graced by Mao Zedong’s visage, has been the largest note in circulation, even though the economy has grown fiftyfold. ...

“I’m convinced the government doesn’t want a larger bill because of corruption,” said Nicholas R. Lardy, a leading authority on the Chinese economy at the Peterson Institute for International Economics in Washington, noting that it would help facilitate corrupt payments to officials. “Instead of trunks filled with cash bribes you’d have people using envelopes. And there’d be more cash leaving the country.”

All the buying, bribing and hoarding forces China to print a lot of paper money. China, which a millennium ago was the first government to print paper money, accounts for about 40 percent of all global paper currency output, according to a report published by the China Banknote Printing and Minting Corporation. Adjusting for the size of its economy, China has about five times as much cash in circulation as the United States. ...

Understandably, printing all that money is a major endeavor. The China Banknote Printing and Minting Corporation runs 80 production lines with 30,000 workers, six bank note companies, two paper mills, a printmaking company, a plate-making corporation and a firm that produces special anticounterfeiting security lines.
--David Barboza, NYT, on one way to battle corruption