China Abandons The Abacus October 19, 2010Posted by tkcollier in Economy & Business.
Tags: China, Economy & Business, Money
That’s a big deal. China hasn’t raised interest rates since 2007, and the move is a sign of strength for China’s economy.
One interesting detail: It’s the first time in modern history that China’s central bank made an interest-rate move that wasn’t a multiple of .09.
“The reason is that on the abacus, adding multiples of nine was much easier than adding multiples of 10. So the modern People’s Bank of China inherited that special character from the old days,” an economist with Citigroup in Beijing told Reuters.
Back in 2007, Bloomberg News cited the abacus as one of three reasons for the multiples-of-nine thing. Here are the other two:
1. China’s financial year is 360 days long, which divides evenly by .09. So annual interest rates are easier to calculate if they’re multiples of .09.
2. “The number nine is very important in the Chinese society and business world,” Chan Mansing, associate professor at the School of Chinese at the University of Hong Kong told Bloomberg. “Nine stands for longevity, abundance and masculinity.”
Today’s rate rise — 0.25 percent — is consistent with increments used by the U.S. Fed and other central banks around the world.