When the whole of China was conquered by the Mongols - the conquest having been completed in 1279 - when the Mongols ruled under the new dynasty called the Yuan, they repudiated both the Ch'ao of the Chin's and all the paper currency of the Southern Sungs. The Mongols were an unlettered race of conquerors, and when they conquered Northern China they found very little of metal circulation. They had to have supplies and when they took over the Chin territories they had an enormous amount of depreciated paper money, the recognition of which by them would have led to no good to themselves. So, they repudiated the existing paper and in the 3rd year of the reign of Kublai Khan, in 1260, it was decreed that the Pao Ch'ao or precious notes were the sole legal currency. These notes were in ten denominations ranging from 10 to 2,000 cash, and taxes and. dues were paid in these notes. The exchange offices were established in all commercial centres, worn-out notes were redeemed for new ones at an arbitrary charge, usually three per cent, of the par value. These issues were called the Chung-Tung, which was the title of the reign of Kublai Khan.
By 1279 the Mongols completed the conquest of China and the Southern Sung dynasty came to an end. The financial conditions in the territories ruled by the Sungs were only a shade worse than those of the portions under the rule of the Chin Tartars. The Mongols had no other course but to issue further paper money. In 1284 the new series, called the Pao-Ch'ao of Chih-Yuan were issued; these new notes were exchangeable for the Chung Tung notes at a rate of one to five or one note of the new series was to exchange for five of the old of equal nominal value. The total of inconvertible paper money that was issued during the 108 years of Mongol rule has no parallel in the history of any ancient or modern country. During the first sixty-four years from 1260 a.d. the total issue of paper notes amounted to 47,611,276 liang or 2,380,563,800 taels, nominal face value - the tael being always taken as equivalent to 1,000 cash. This gives an average of an issue of 37,000,000 taels a year. The dynasty lasted till 1367 or 108 years, and issues in the latter part of its duration were greater than in the first sixty-four years. According to Chinese historians the average during the whole dynastic period was at the rate of 40,000,000 taels a year; in other words the Mongols during their reign of 108 years flooded the country with 4,320,000,000 taels of inconvertible paper money.
The three kinds of paper money issued during the reign of the Mongols were Pao-Ch'ao of Kublai Khan issued in 1260, Pao-Ch'ao of Chih Yuan issued in 1284 and Pao-Ch'ao of Chih-Ta issued in 1310. This last was issued when the Mongol dynasty was on its last legs and when paper money was so thoroughly depreciated as to be almost useless except where the authorities were able to force it on the people. These were exchangeable for those of the Chih Yuan at the rate of 1 to 5 - the depreciation since the issue of the Chung Tung being thus 96 per cent.
During the last years of the reign of this dynasty the Mongols made various conquests, mainly through sheer force of arms. Thus they were enabled to bring about extensive commercial relations between China and other parts of Asia. Large quantities of silver were brought into the country in exchange for tea and silk and the use of silver as currency was being extended. The familiar units of weight, liang or tael, and the ting, worth nominally fifty taels, were used as the units of silver currency. But before the dynasty could derive any benefit from this change in the state of affairs, it was overthrown by the Mings. The whole administration, and, along with it, the finances, were thrown into utter confusion during the period when the Mings were establishing their power in the country. The Mings, following the example of their predecessors, repudiated all the paper currency that was issued during the reign of the Mongols; for the moment, there was no problem of paper money.