The invention of paper money.

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Table of Contents

A banknote is a negotiable promissory note, which a bank can issue. It is payable to the bearer on demand, and the amount payable is apparent on the face of the note. Banknotes are considered legal tender; along with coins, they make up the bearer forms (A bearer form is a security not registered in the issuing corporation’s books, but which is payable to its bearer, that is, the person possessing it¹.) of all modern money².

  • The first mention of the use of paper as money is found dating back to 1023 in historic Chinese texts. Emperor Chen Tsung of the Song Dynasty awarded rights to issue universal bills of exchange to 16 merchants during his reign. When several of those merchants failed to redeem notes on presentation, the currency’s credibility was brought into question. In response, the emperor established a “bureau of exchange” within the government and charged it with issuing circulating paper notes³. Thereby protecting its credibility.
  • The main purpose of the introduction of paper money was to make it easier and safer to transport large sums as coins are heavy and, in large quantities, easily stolen.
  • Below is a photograph of the brass printing plate used to print the money. It reads: “The bill may be used in the stead of 77,000 wen of metal coinage.”

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Here is a portrait of Cheng Tsung (also known as Zhenzong):

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