Some places in Tibet may accept US currency but they are limited and often don't give the best exchange rate. Your best bet is to exchange your money into Chinese currency for use on the plateau.
In large cities, such as Lhasa, ATM machines are very convenient to use with your home ATM card. The only caution is of course there are limits to how much you can withdraw in a day, which include limits imposed by your own ATM card's bank. Check before you leave what your bank's ATM policy is, and then see if that limit together with your itinerary might make it possible to secure most of your money when you need it through the use of ATM machines.
In mainland China, major currency is easily changed in the larger cities but becomes more difficult as you move into areas of Tibet. The Bank of China and some hotels are the only authorized money changers. However, some black market money exchangers exist. They rarely have better rates, but may be open different hours in the case of an emergency.
The Bank of China has branches in Lhasa, Dram, Zhigatse, Ziling, Kermo, Dartsedo, Gyeltang, Barkham and Aungchu; all which prefer traveler’s checks and hard currency. US$ cash is preferred by unofficial money changes. It is important to carry a sufficient amount of RMB for long drives or treks. Once outside larger cities, there will no access to exchange facilities. It is also wise to carry extra cash for unforeseen expenses.
Currencies from Australia, Canada, the US, the UK, Hong Long, Japan, the EU and most of the rest of Western Europe are all accepted at the Lhasa Bank of China.
The official exchange rate is given at most hotels and banks so there is no real need to compare rates. The typical commission on an exchange is 0.75%.
Kathmandu:
Himalaya Bank (Tridevi Marg; 8am-8pm Mon-Fri)
Changes traveler’s cheques and gives cash advances on Visa cards
Standard Chartered Bank (9:30am-7pm Mon-Fri, 9:30am-12:30pm Sat & Sun)
Has two ATMs in Thamel and around the corner from Himalaya Bank on Kantipath.
Chengdu:
Bank of China (Renmin Nanlu; 8:30am-6pm Mon-Fri, 8:30am-5pm Sat & Sun)
Changes money and traveler’s cheques and offers cash advances on credit cards.
Another branch is located on Renmin Donglu and has an ATM outside the Xinnanmen bus station.
Lhasa:
Bank of China branch (Zhongguo Yinhang; 9:30am-1pm & 3:30pm-6:30pm Mon-Fri)
Conveniently located option changes cash and travelers cheques but can’t change money or give credit card cash advances on the weekends. The ATM is by the Xiaofan Guesthouse, on the east side of Potala Square.
Tsang-Shigatse:
Bank of China (Shanghai Zhonglu; 9am-1pm & 3:30pm-6:30pm Mon-Fri, 10am-5pm Sat & Sun, until 5pm in winter)
Changes traveler’s cheques and cash and does credit card advances. 24-hour ATM outside.
It is sensible to change you money back into more useful currency either at the border (into Nepali rupees) or into dollars in Hong Kong or at the Bank of China when leaving. Be sure to keep you exchange receipts to convert back from yuan to dollars; you'll need them at any Bank of China.
Also note that it can be hard to exchange Nepali rupees - at least in fall 2008, it seemed impossible to get them exchanged even in the Delhi airport! Other oddities are that 500 and 1000 Indian rupee notes - which are just $10 and $20 roughly respectively in terms of US dollars - are banned in Nepal, and cannot be used to pay bills or to convert.
David Germano