For thousands of years, the idea of China’s money as a unit of account was divorced from money as a store of value [1,2]. Precious metals were rare, and jade was the most valuable commodity available. But jade is worthless when divided into units of account, so it could never be both.

Gold, silver, jade, were things to be hoarded; copper coins and paper money were things to be spent [3].

When the Spanish arrived and brought silver coins as money, the Chinese were so impressed that they called them yuan 圓: “round” [4]. Prior to yuan 圓, silver had only exchanged in slug form, the boat shape stereotypically associated with wealth.

圓

貝 is the word for “cowry”. Add a mouth 口 to a cowry and you have the character for “personnel”: 員. Draw a box around the person and you have yuan 圓, which means “round”. (etymology)

Silver pesos circulated in East Asia as unofficial currency until local governments issued their own. Hong Kong, Japan, Korea, and China all named their currencies after Spanish pesos. Yen, won, and yuan all mean “round”.

Hong Kong issued the first yuan in 1866.

香港壹圓 (Hong Kong one yuan). Why is the word for “one” so complicated? To prevent alterations.

There was confusion over whether to write yuan as 圓 or 元. Both words are pronounced “yuan”. 元 comes from 元寶, the silver treasure boats. But the new silver was round!

China had low literacy, so the simpler 元 was adopted for written transactions, while 圓 became the character for printed currency.

In the 50s, traditional Chinese characters were abandoned for simplified characters as part of Chairman Mao’s plan to abolish Chinese altogether and adopt a global unified language governed by communists. That second part never happened. As a result, China ended up with a malformed instruction set that is as nonsensical to nationals as it is to foreigners.

References:
1. Richard von Glahn, Fountain of Fortune: Money and Monetary Policy in China, 1000-1700. 1996.
2. 管子: 乘馬
3. 管子: 揆度
4. 香港和中國貨幣單位的「員」、「圓」和「元」問題 –灼見名家
5. China and 錢