Default lines in China – Aaron Woolner column

Chinese authorities are trying to build a domestic credit default swap market, but the project has not proceeded smoothly

China and financial innovation were once closely linked: paper money – so-called flying cash, because the wind could tear it out of the bearer’s hands – appeared as official tender in the Song dynasty at the start of the eleventh century. It hung around for a brief period: by the mid-fifteenth century China had switched back to a silver-backed currency.

But China was well ahead of its time: it wasn’t until the Nixon Shock of 1971, when the US president ended the link between dollar and gold