The origin of Japanese currency can be traced to the Wu Zhu bronze coin of China, which was introduced under the Han Dynasty around 221 BC. Until the 8th Century the Japanese imported such coins from China. However, in 708 the Japanese government began minting their own silver and copper coins called the Wado Kaichin or Wado Kaiho, which imitated the Chinese Kai Yuan Tong Bao coin's size, shape, and weight.
Approximately 250 years later though, the Japanese government entered into a period of decline and as they could no longer mint their own currency, begun to import Chinese currency again. Over the next few centuries, the inflow of Chinese coins did not meet the demand for a monetary medium that resulted from the growing trade and economic expansion. To meet this demand, two privately minted Japanese coins (from the 14th - 16th century) Toraisen and the Shichusen entered into circulation.
Around the late 15th Century, warlords had accumulated large debts that needed to be paid off, which subsequently encouraged the minting of gold and silver coins known as the Koshu Kin. Under the rule of Toyotomi Hideyoshi (Edo Period), gold coinage was made into a standard currency. The Tokugawa Shogunate Government then established a unified monetary system that consisted of these gold coins in addition to silver and copper. Minting took place in the Kinza Gold mints where the present head office of the Bank of Japan now stands.
Although some paper currency had been introduced previously (circa 1600), it was not until the Meiji Restoration that the first nationally accepted paper money was established. The Meiji Government wished to simplify and centralise all the various coins (holding different values) that came about under the Edo Period and thus created the Yen in 1871. The New Currency Act developed a monetary system similar to that of European countries, and made a decimal accounting system of Rin, Sen, and Yen.
Thus the gold standard was adopted and the round-shaped Yen replaced the previous gold and silver coinage. The first national Yen banknotes of the 1870s resembled US banknotes as they were printed by a US company. However, the 153 national banks of Japan of the late 19th century were to lose their authority when the official Bank of Japan was established in 1882.
In most cases, the Japanese currency is simply called Yen, while the native pronunciation is [en]. In Japanese, Yen are written like this: kanji (円).
Known as the currency of Japan, the Yen, literally meaning “circle” or “round object” has been mirrored towards the silver Mexican Peso with the round shape of its coins. During earlier times, one Yen used to correspond to 100 sen, but according to researchers the sen is no longer an accepted currency used in Japan.
Introduced by the Meiji government, the Yen was used to replace the unstable Edo Period system of the mon currency wherein no standard of exchange was outlined. The New Currency Act of 1871 officiated Yen as the Japanese currency in a hope to bring stability to Japan’s rocky currency situation. Japan’s objective was to enter the Gold Standard of currency and with the signing of the New Currency Act that is exactly where they ended up.
The stable monetary exchange became a floating exchange which caused the Yen to become a floating currency. The floating nature of the Yen caused its overall value to drop. Many researchers state that the Yen ultimately lost its full value during World War II. Japan’s currency once found itself within the Gold Standard, but once the United States dropped their Gold Standard status, surcharges began to be placed on exchange rates and imports from Japan. The Japanese later signed the Smithsonian Agreement to enter into a fixed exchange in relationship to the US Dollar. However, with damaging fluctuations in the supply and demand aspects of market, the agreement was dropped.
In 1949 the Yen was equivalent to 1 US Dollar and this exchange stayed in effect until 1971 according to researchers.