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Yuan vs. Renminbi: An Overview Chinese currency is a hot topic these days for many reasons. Not only does it define the state of one of the world's biggest economic superpowers, but it is also central to one of the most debated issues involving China today—its perceived mercantilist policy of artificial undervaluation of its currency against the U.S. dollar to give its exports an unfair price advantage. There had been a consensus among economists that the Chinese currency has been undervalued in the 15% to 40% range for many years.   However, the International Monetary Fund (IMF) stated in the summer of 2015 that the Chinese currency was no longer undervalued against the dollar given its recent appreciation.   Chinese money, however, comes by two names: the Yuan (CNY) and the people's renminbi (RMB). The distinction is subtle: while renminbi is the official currency of China where it acts as a medium of exchange , the yuan is the unit of account of the country's economic and financial system. 1:02 Yuan Vs RMB: Understanding The Difference Money As a Medium of Exchange Money enables anyone who possesses it to participate as an equal market player. When consumers use the money to purchase an item or service, they are effectively making a bid in response to an asking price. This interaction creates order and predictability in the marketplace. Producers know what to produce and how much to charge, while consumers can reliably plan their budgets around predictable and stable pricing models. When money, as represented by a currency, is no longer viable as a medium of exchange, or if its monetary units can no longer be accurately valued. Consumers lose their ability to plan budgets, and there is no longer a way to gauge supply and demand accurately. In short, market volatility will cause the markets to become chaotic. Prices are bid up or raised, in response to worries about scarcity and fears of the unknown. Meanwhile, supply diminishes because of hoarding behaviors,