We use the Chinese experience between 1867 and 1910 to illustrate how the volatility of vehicle currencies affects trade.Todays widespread vehicle currency is the dollar.However,the macroeconomic effects of this use of the dollar have rarely been addressed.This is partly due to iden-tification problems caused by its international importance.China had adopted a system,where silver was used almost exclusively for trade,sim-ilar to a vehicle currency.While being important for China,the global role of silver was marginal,alleviating said identification problems.We develop a bias corrected structural VAR showing that silver price fluctu-ations significantly affected trade We find that silver price shocks have exerted signifcant effects on chinese trade.Our findings provide useful implications for the effects of value changes in vehicle currency on the emerging markets.