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The origins of the banknote can be traced to flying cash. They were the original paper currency of the Tang dynasty.

Origins

Due to inconveniences in transferring large amounts of coins over large distances, the Tang government decided to pay merchants with which they made business in paper money. Due to their tendency to fly away, the notes were dubbed "flying cash."

Use as a Legal Tender

Flying cash was never meant to be used as legal tender, and therefore, its circulation was limited. However, since they could be exchanged for hard currency at the capital, they were traded amongst merchants as if they were currency. It wasn't until the Song dynasty and subsequent Chin occupation that paper money was officially established as a legal tender.

Westward Spread

The use of paper money spread westward through Mongolian traders. By 1661, European countries were printing paper currency.

See Also

• Banknote
• Fiat currency

References

1. "Origins of Money and Banking". University of Exeter. May 25 2005. Retrieved 2007-03-09. {{cite web}}: Check date values in: |year= (help)CS1 maint: year (link)
2. "Paper Money". The Silkroad Foundation. January 1 2000. Retrieved 2007-03-09. {{cite web}}: Check date values in: |year= (help)CS1 maint: year (link)

• Economic history of China
• Tang Dynasty
• Banknotes
• Medieval currencies
• Currencies of Asia