Central Reserve Bank of China

The Central Reserve Bank of China was the principal central banking institution of the Wang Jingwei regime, the Japanese-supported government that controlled parts of China during the Second Sino-Japanese War. Although it presented itself as a national monetary authority, it operated within the political and economic framework imposed by the Japanese occupation and is generally described in historical sources as one of the occupation-era or puppet banks of issue in China. The institution was formally established on 21 December 1940 and began business in Nanjing on 6 January 1941. Its initial capital was 100 million yuan. One half was supplied by the regime's Ministry of Finance, while the other half was borrowed from Nissho Company and Huaxing Commercial Bank. The bank was intended to consolidate monetary control in the territory governed by the Wang Jingwei administration and to replace the monetary role that Huaxing Commercial Bank had previously performed in Shanghai. Its creation formed part of a wider Japanese effort to organize separate monetary systems across occupied East Asia. Japan had already established or sponsored comparable institutions in Manchuria, Inner Mongolia, North China, and other occupied territories. The Central Reserve Bank was expected to help draw the Wang Jingwei-controlled area into a yen-linked economic sphere, analogous to arrangements associated with the Bank of Taiwan, Bank of Chosen, and Central Bank of Manchou. In practice, its authority coexisted with other occupation-era banks. The United Reserve Bank continued issuing currency in North China, while the Mengjiang Bank served areas around Kalgan and the Huaxing Commercial Bank had earlier operated in Shanghai. The bank issued paper money commonly referred to in English as Reserve Bank notes, or chubei-quan. Its notes used a portrait of Sun Yat-sen, echoing the imagery of currency issued by the internationally recognized Central Bank of China under Chiang Kai-shek. The use of this imagery reflected the Wang regime's effort to claim institutional continuity and Chinese political legitimacy, even though the bank's monetary role was closely tied to Japanese occupation policy. The institution's workforce was largely Chinese, but Japanese personnel occupied or influenced many senior, advisory, foreign-exchange, and consultative positions. The bank's effectiveness depended on political authority, coercive economic measures, and the willingness of businesses and other banks to accept its currency. Confidence weakened during 1942 as Japanese military prospects deteriorated in the Pacific War. Resistance to the currency included refusals by some financial institutions to open accounts denominated in Central Reserve Bank notes. Tensions surrounding the refusal of Bank of China personnel to cooperate reportedly escalated into violence against the bank's agents. As the occupation economy became increasingly unstable, the currency experienced severe depreciation and hyperinflation. By the final phase of the war, the Shanghai branches of the Bank of China and Bank of Communications had come under the Central Reserve Bank's operational control, illustrating the institution's expanded reach but also the coercive environment in which it functioned. This expansion did not restore public confidence or create a durable monetary system. The Central Reserve Bank ceased functioning in August 1945 after the fall of the Wang Jingwei regime and Japan's surrender. Its Osaka branch was subsequently closed by American occupation authorities on 30 September 1945. The bank therefore existed for less than five years and left behind a legacy associated with wartime monetary fragmentation, occupation finance, currency substitution, and hyperinflation rather than with a continuing commercial or institutional brand.

The Central Reserve Bank of China emerged from the Japanese occupation's attempt to construct separate financial institutions for the territories controlled by Japan and its allied administrations during the Second Sino-Japanese War. The Wang Jingwei regime, established in Nanjing, required a monetary institution that could support its claim to governmental authority while reducing reliance on the currency and financial institutions associated with Chiang Kai-shek's Nationalist government. The bank was legally constituted on 21 December 1940 and opened on 6 January 1941. Its starting capital was 100 million yuan. The Wang regime's Ministry of Finance provided half of that amount, while the balance was borrowed from Nissho Company and Huaxing Commercial Bank. The new institution took over the central monetary function that Huaxing Commercial Bank had previously been expected to perform in Shanghai. Its structure reflected a broader Japanese regional strategy. Comparable banks of issue operated in Manchuria, North China, Inner Mongolia, and other occupied areas. The intended objective was to organize the Wang regime's economy within a Japanese-controlled yen zone, using a local bank and local currency while keeping the system politically and financially dependent on Japan. The bank was not, however, the sole issuer throughout occupied China. The United Reserve Bank continued to operate in the Peiping area, and the Mengjiang Bank issued currency around Kalgan. This left China divided among several overlapping occupation currencies and institutions. The Central Reserve Bank issued notes known as Reserve Bank notes, or chubei-quan. Their design included a portrait of Sun Yat-sen, a symbol also used on currency issued by the Central Bank of China under the Nationalist government. The design choice sought to present the Wang regime's currency as Chinese and nationally legitimate, despite the bank's dependence on the Japanese occupation system. Chinese employees carried out much of the bank's routine work, but Japanese executives, advisers, consultants, and foreign-exchange managers exercised substantial influence. The bank's authority was supported by the regime's administrative and coercive power rather than by broad public confidence. Some financial institutions resisted the new currency. A particularly serious confrontation involved the Bank of China's refusal to open accounts in Central Reserve Bank currency; violence against its agents was reported in connection with the dispute. The bank's position weakened sharply from 1942 onward. Japan's deteriorating military position damaged confidence in the political future of the Wang regime and in the value of its currency. The result was rapid depreciation and hyperinflation. As the war continued, the bank expanded its operational control over banking in Shanghai, and by the end of the conflict the Shanghai branches of the Bank of China and Bank of Communications had fallen under its control. This expansion was an expression of occupation authority and did not resolve the underlying lack of monetary credibility. After Japan surrendered and the Wang Jingwei regime collapsed, the Central Reserve Bank ceased functioning in August 1945. Its Osaka branch remained open briefly and was closed by American occupation authorities on 30 September 1945. No continuing institution or modern successor brand is associated with it. Historically, the bank is best understood as a short-lived wartime central bank, a component of Japan's occupation-finance system, and an issuer of currency during a period of severe monetary fragmentation and inflation.

• 1945

  End of operations

  [1]Central Reserve Bank of Chinaen.wikipedia.org

  The bank ceased functioning in August 1945 after the fall of the Wang Jingwei regime.

• 1945

  Closure of Osaka branch

  [1]Central Reserve Bank of Chinaen.wikipedia.org

  American occupation authorities closed the bank's Osaka branch on 30 September 1945.

• 1942

  Loss of confidence and hyperinflation

  [1]Central Reserve Bank of Chinaen.wikipedia.org

  Confidence in the bank's currency began to collapse as Japanese military prospects deteriorated, contributing to hyperinflation.

• 1941

  Operations begin in Nanjing

  [1]Central Reserve Bank of Chinaen.wikipedia.org

  The bank opened on 6 January 1941 with initial capital of 100 million yuan and began issuing its own notes.

• 1941

  Replacement of Huaxing's monetary role in Shanghai

  [1]Central Reserve Bank of Chinaen.wikipedia.org

  The Central Reserve Bank assumed the monetary role previously assigned to Huaxing Commercial Bank in Shanghai.

• 1940

  Formal creation

  [1]Central Reserve Bank of Chinaen.wikipedia.org

  The Wang Jingwei regime formally established the Central Reserve Bank on 21 December 1940.

A wartime central bank intended to provide monetary authority for the Wang Jingwei regime and to integrate its controlled territory into a Japanese-led yen-zone economic system.

• Currency · 1941

  Reserve Bank notes

  The bank's principal public-facing product was its paper currency, commonly called Reserve Bank notes or chubei-quan. These notes were intended to circulate in areas administered by the Wang Jingwei regime and to support a separate occupation-era monetary system. Their designs included a portrait of Sun Yat-sen, linking the notes visually to Chinese national monetary imagery. In practice, acceptance was uneven and the currency suffered severe depreciation and hyperinflation as confidence in the regime and Japanese war effort declined.

• Banking and monetary administration · 1941

  Central banking services

  The institution performed central-bank functions for the Wang Jingwei regime, including currency issuance, monetary administration, and banking coordination. Its authority extended particularly into Nanjing and Shanghai, where it was intended to replace earlier arrangements involving Huaxing Commercial Bank. It also became involved in foreign-exchange management and the operational control of other banking institutions in Shanghai.

• 1942

  Expansion of control over Shanghai bankingStrategy

  Background

  The occupation administration sought tighter control over Shanghai's financial institutions as the wartime economy became more dependent on Japanese-directed monetary mechanisms.

  Action taken

  The Central Reserve Bank expanded its operational control, and by the end of the war the Shanghai branches of the Bank of China and Bank of Communications had come under its control.

  Aftermath

  Greater institutional control did not prevent the collapse of confidence in the currency or the broader inflationary crisis.

  Source

• 1941

  Introduction of Reserve Bank currencyProduct launch

  Background

  The new central bank required a currency through which the Wang regime could administer payments and pursue a separate monetary policy in its controlled territory.

  Action taken

  The bank issued Reserve Bank notes, also known as chubei-quan, for circulation in the areas under its authority.

  Aftermath

  The notes encountered resistance and later underwent severe depreciation and hyperinflation as wartime confidence declined.

  • Bank of China — The Bank of China resisted the Central Reserve Bank currency in at least some account-opening and operating contexts, contributing to confrontation with the new institution.

  Source

• 1940

  Establishment of a separate central bank for the Wang regimeStrategy

  Background

  The Japanese-backed Wang Jingwei administration sought a monetary institution that could support its political authority and reduce dependence on Nationalist Chinese financial institutions.

  Action taken

  The regime created the Central Reserve Bank and capitalized it through a combination of government funding and loans associated with Nissho Company and Huaxing Commercial Bank.

  Aftermath

  The bank began operations in January 1941 but remained part of a fragmented occupation monetary system and never achieved durable public confidence.

  Initial capital. 100 million yuan (At establishment in 1940)

  Source

1. 1Central Reserve Bank of Chinaen.wikipedia.org