The Spaniards hankering for the riches of China ran across an immediate problem: China had little interest in outside goods. There was, however, one thing the Chinese would accept: silver.

By the sixteenth century, the Chinese money supply, serving more than a quarter of the world’s population, had — for a variety of policy and technical reasons — been standardised on silver. China, however, had limited available silver of its own. Spain’s colonies in America did, however, have supplies of silver from the great mine at Potosí that could at times seem unlimited. The influx of silver from the Manila galleon provided financial liquidity to the Chinese economy — and also opened the world to the first instances of global exchange rate arbitrage taking advantage of the differing valuations of silver vs gold in China and Europe.

In the 1730s, Spain introduced ‘milled’ dollars in the Mexican mint. As a result of their regularity and security features, these coins became the most widely accepted currency in the world and, indeed, the first to approach universal acceptance. Not only is the US dollar directed derived from these coins, but the Yuan, Yen, HK dollar, Ringgit and other Asian coins and currencies are, via the later Mexican dollar, also direct descendants.