The Chinese New Year is the most significant and widely celebrated holiday in China and among Chinese communities worldwide. It marks the beginning of the lunar new year and is a time for family reunions, feasting, and cultural traditions. One of the most iconic customs associated with the Chinese New Year is the giving of red envelopes, or hongbao in Mandarin and lai see in Cantonese, which contain moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More and symbolize good luck and prosperity. This tradition, deeply rooted in Chinese culture, has a profound impact on cashMoney in physical form such as banknotes and coins. More demand. In recent years, innovative approaches by banks and financial institutions have transformed how red envelopes are distributed, blending tradition with modern technology.
The practice of giving red envelopes dates back centuries and is steeped in cultural significance. Red, considered an auspicious color in Chinese culture, symbolizes happiness, wealth, and good fortune. During the Chinese New Year, elders and married couples give red envelopes filled with money to children, unmarried adults, and employees as a gesture of goodwill and blessings for the coming year.
The origins can be traced back to the Han dynasty (206 BCE–220 CE) when amulet-like items in the shapes of coins were worn. Early practices resembling money giving took place in the Tang dynasty court (618–907 CE), where coins were scattered in springtime as part of celebrations. Giving children money during celebrations became an established custom during the Song and Yuan dynasties (960–1368). In the Ming and Qing dynasties (1368–1911/12), this tradition evolved further with coins being given to children threaded on red string.
The modern concept of hongbao emerged in early 20th-century China. Elders would give money wrapped in red paperSee Banknote paper. More to children during the Lunar New Year as a talisman against evil spirits, known as sui
The amount of money inside the envelope varies depending on the relationship and regional customs. Even numbers, except for the number four (considered unlucky due to its phonetic similarity to the word for “death” in Chinese), are regarded as lucky. Six (symbolising smooth progress) and eight (symbolising prosperity) are particularly favoured. Beyond monetary value, the act of giving and receiving hongbaore presents a gesture of goodwill, reinforcing social bonds and conveying respect and care.
The tradition of red envelopes is not limited to family settings. In workplaces, employers often distribute hongbao to employees as a token of appreciation and to foster loyalty. Similarly, businesses may give red envelopes to clients and partners to strengthen relationships. This widespread practice creates a significant surge in cash demand during the weeks leading up to the Chinese New Year.
The tradition of giving red envelopes leads to a significant increase in cash demand during the Chinese New Year period. In the weeks leading up to the festival, many people visit banks to exchangeThe Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro. More old notes for new ones, as giving soiled or wrinkled bills is considered bad taste. This leads to long queues and increased activity in financial institutions.
In China, the People’s Bank of China (PBOC) routinely injects billions of yuan into the banking system to meet the heightened demand for cash during the holiday season. For example, in 2023, the PBOC injected approximately 1.5 trillion yuan (around $220 billion) into the financial system to ensure sufficient liquidityDescribes the extent to which assets or rights can be converted into cash without causing a significant decrease in the asset’s price. Accordingly, liquidity is often inversely proportional to the profitability of the asset and involves the trade-off between the selling price and the time needed to convert it to cash. In finance, cash is considered the most liquid asset and cash is sometimes used as a synonym for liquidity (e.g. cash reserves; cash pooling…). More for red envelopes, gifts, and other holiday-related expenses. Ahead of the 2025 Lunar New Year, the PBoC injected a record 2.2 trillion yuan ($300 billion) according to the Financial Times.
According to the Hong Kong Monetary AuthoritySee Central Bank More (HKMA), cash withdrawals from ATMs typically increase by 20-30% in the weeks leading up to the holiday. This surge is driven by the tradition of giving lai see (the Cantonese term for red envelopes) and the general increase in consumer spending during the festive period.
In countries with strong Chinese communities, such as Singapore, Malaysia, Indonesia, and the United States, the demand for cash also rises significantly during the Chinese New Year. For instance, in Singapore, banks often report a 15-20% increase in cash withdrawals in the weeks before the holiday. Similarly, in the United States, cities with large Chinese populations, such as San Francisco and New York, see a notable uptick in cash demand as families prepare for celebrations and red envelope exchanges.
In recent years, the tradition of giving red envelopes has adapted to modern technology. Digital red envelopes have become increasingly popular, especially among younger generations. Platforms like WeChat and Alipay offer features that allow users to send virtual red envelopes to friends and family, combining the traditional practice with digital transactions. In 2017, it was estimated that over 100 billion virtual red envelopes were sent during the New Year holiday.
Despite the rise of digital red envelopes, the demand for physical cash remains strong during the Chinese New Year. Many people still prefer the tangible aspect of giving and receiving physical red envelopes, viewing it as a more authentic expression of the tradition. This preference continues to drive the seasonal surge in cash withdrawals and the need for increased liquidity in the financial system.
Banks and financial institutions recognize the cultural significance of physical hongbao and have found innovative ways to distribute them, often combining tradition with modern marketing strategies. Below are some creative examples:
Many banks design red envelopes that incorporate their branding with traditional elements. These envelopes often feature intricate designs, auspicious symbols (such as dragons, gold ingots, or the character “福” for good fortune), and the bank’s logo. For example:
To add an element of excitement, some banks include lucky draw opportunities or prize codes inside their physical red envelopes. Customers who receive these envelopes can participate in contests to win cash prizes, discounts, or other rewards. For instance:
Some banks have taken the concept of red envelopes to the next level by pre-loading them with cash or gift cards. These envelopes are distributed to high-net-worth clients, corporate partners, or loyal customers as a premium gift. For example:
Banks often bundleA set (normally five or ten) of bundled banknote packages (straps) of one hundred notes. More red envelopes with other festive items to create gift packs that customers can collect from branches or receive through mail. These packs may include items such as calendars, coupons or small decorative items like paper lanterns or zodiac-themed trinkets.
For example, Maybank in Malaysia has offered red envelope gift packs which include beautifully designed envelopes, coupons, and small tokens of appreciation.
Some banks have introduced interactive campaigns that combine physical red envelopes with digital experiences. For instance:
Some banks use red envelopes as a tool for corporate social responsibility (CSR) and community engagement. For example:
To promote financial literacy, some banks include educational content or financial planning tips inside their red envelopes. For example:
Banks often use red envelopes as part of their branch decorations and festive events during Chinese New Year. For example:
Banks also distribute red envelopes to their corporate clients and employees as a gesture of goodwill. For example:
To create a sense of exclusivity, some banks offer limited-edition red envelopes that double as collectible items. For example:
The tradition of giving red envelopes during Chinese New Year is a cherished custom that symbolizes the sharing of blessings and the transfer of good fortune. This practice has a significant impact on cash demand, leading to increased activity in banks and prompting the central bank to inject additional liquidity into the financial system. While modern adaptations like digital red envelopes have gained popularity, the enduring appeal of physical red envelopes ensures that this tradition remains a central aspect of Chinese New Year celebrations.
Good fortune in the Year of the Snake, may you rise higher step by step!