native bank

The term "native bank" refers to financial institutions in China that emerged during the 18th century to support long-distance trade. These banks, known to foreigners as native banks, accepted deposits, issued loans, and facilitated fund transfers between regions. They played a crucial role in the commercialization of the economy by issuing private notes that supplemented the metallic currency system, transforming it into one where paper notes circulated alongside copper coins and silver.1

These institutions were instrumental in the growth of interregional trade in goods like tea, cotton, and silk. By providing credit and mechanisms for fund transfer, native banks enabled merchants to conduct large-scale transactions, contributing to economic expansion without direct government involvement. This development was a significant innovation driven by the needs of long-distance traders.1