Old Taiwan Dollar - History

History

Taiwan was under Japanese rule from 1895 to 1945 and the colonial government of Taiwan issued the Taiwan yen during this period through the Bank of Taiwan. In 1945, after the Japanese Empire was defeated in World War II, the Republic of China (ROC) assumed control of Taiwan. Within a year, the ROC government assumed control of the Bank of Taiwan and issued Taiwan dollars (also known as Taiwan Nationalist yuan or TWN) as a "provisional" replacement for the Taiwan yen at the rate of one to one. The new banknotes were initially printed in Shanghai, and were shipped to Taipei. After the Nationalists consolidated their control over Taiwan the banknotes were printed in Taipei. The currency was not subdivided, and no coins were issued.

Due to the Chinese Civil War in the late 1940s, Taiwan, like mainland China, suffered hyperinflation. As inflation worsened, the government issued banknotes at higher and higher denominations, up to one million yuan. Because the inflation of the Old Taiwan dollar was only a side effect of the inflation of Chinese yuan of mainland China, it depreciated at a slower rate than the currency used on the mainland.

The Old Taiwan dollar was replaced by the New Taiwan dollar on June 15, 1949, at the rate of 1 New dollar = 40,000 Old dollars. The ROC Nationalists were defeated by the Communists in the same year and retreated to Taiwan. After retreating to Taiwan, the Nationalist government was able to manage the currency's inflation, and the severe inflation that had characterized Chinese currencies in the late 1940s ended.