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The Formation of the Modern East Asian Economy
From 630, and particularly with the first government mintage of copper coins in 708, Japan can be said to have imitated the Tang form of currency. But its coins, intended for both private transactions and tax payments, rarely came into use outside the vicinity of the capital of Kyoto. Debasement of the coinage to 1% of its original value over the eighth and ninth centuries partly explains this restricted use, but more important was the primitive level of production in Japan at that time. Thus, the government's cessation of minting copper coins in 947 amounted to its public recognition of the predominance of bartering, mainly with rice, throughout most of the country. In this period, then, Japan's currency links with China were more imitations and abortive horizontal continuities than direct interconnections.

From the mid-twelfth century, however, the story was different. From then to the early sixteenth century, Japan imported an estimated 30 to 40 million strings of Chinese copper cash; that is, 30 % of China's production during these centuries. The government at first did not welcome this new money, since in the Kyoto markets these coins greatly upset the transaction value standards it had set in terms of rice and silk. But by 1226, it felt compelled to rescind this ban, as these coins had rapidly found acceptance elsewhere for payments in large-scale temple and manorial projects. Henceforth, Chinese coins were accepted by the government in private and official transactions, and Japan accepted a heave dependence on Chinese coins for its commercial transactions. Historical continuities had given way to interconnections, in which Japan and its currency were decidedly subordinate.

Early on in Japan's medieval period, 90% of this imported Chinese coinage was of Northern Sung vintage. But from the late fourteenth century, imported Ming coins began to circulate within Japan. Their copper content was often quite low, and their introduction to the Japanese market led to the same problems of currency confusion and instability already seen in China. In fact, by the mid-fifteenth century, the Japanese government felt it necessary to distinguish between good and bad Chinese coins. And, from the late sixteenth century to the early seventeenth century, they saw the difference in their market value within Japan rise from twofold to tenfold. In other words, the Ming government's inability to control the quality of its empire's coinage and the quantity of coins in its realms began to force Japan to consider establishing a more stable currency of its own.

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