Why did the use of paper money develop?

During the Qin (221-206 BC) and the Han (206 BC-AD 220) dynasties that preceded the Song, the standard currency used was known as the guan. Song economists knew that they could not further devalue the metal currency without adversely affecting the economy, so they developed the idea of paper currency.

Why did people start using money in the past?

In the past, as today, no society was completely self-sustaining, and money allowed people to interact with other groups. People used different forms of currency to mobilize resources, reduce risks and create alliances and friendships in response to specific social and political conditions.

Why does paper currency still exist?

Obtaining airline tickets, hotel rooms, auto rentals, etc., is most difficult for those who do not have bank accounts and bank‐​issued credit cards. By necessity, those without bank accounts are driven into the cash economy, where their paper currency is hard to protect and often stolen.

When did paper money popular?

Paper bills were first used by the Chinese, who started carrying folding money during the Tang Dynasty (A.D. 618-907) — mostly in the form of privately issued bills of credit or exchange notes — and used it for more than 500 years before the practice began to catch on in Europe in the 17th century.

Why did the Chinese began using paper money instead of bronze coins?

The use of paper currency was initiated by merchants. To avoid having to carry thousands of strings of coins long distances, merchants in late Tang times (c. 900 CE) started trading receipts from deposit shops where they had left money or goods.

Why did China switch to paper money?

Compared to traditional money made from precious metals, paper money was easier to transport, and the use of paper money also freed up metal that could be put to other use.

Who first used paper money?

China
The first known examples of paper currency as we would understand it today were created in China during the Song Dynasty (AD 960–1279). Promissory notes known as “Jiaozi” were printed by a group of merchants in Sichuan during the reign of Emperor Zhenzong (AD 997–1022).

How did gold become a currency?

Gold has always played an important role in the international monetary system. Gold coins were first struck on the order of King Croesus of Lydia (an area that is now part of Turkey), around 550 BC. They circulated as currency in many countries before the introduction of paper money.

Why was paper money invented in China?

China invented paper money during the Tang Dynasty that ruled between 618 and 907, and they used this currency for a long time before it found its way to other countries. Being shrewd business people, the Chinese found the weight of the coin money to be cumbersome and figured that printed money would be more efficient.

What was the purpose of paper money in ancient China?

The first paper banknotes appeared in China about 806 AD. An early use of paper was for letters of credit transferred over large distances, a practice which the government quickly took over from private concerns. The Chinese, with their great gift for pragmatism, labelled this practice “flying money”.

What is the history of paper currency?

The history of paper currency is rooted in the monetary exchange system, which replaced bartering for goods. Coins created with a specific amount of gold, silver or bronze established a uniform measurement of exchange, which was difficult to transport because of the weight.

Why do banks use paper money instead of coins?

However, banks eventually started using paper banknotes for depositors and borrowers to carry around in place of metal coins. These notes could be taken to the bank at any time and exchanged for their face value in metal–usually silver or gold–coins. This paper money could be used to buy goods and services.

What happened to the old money in China?

The old money was never retired or destroyed, however, leading to rampant inflation by 1106. The Yuan dynasty abolished the expiration of the money, allowed the paper to equal hard commodity rates such as gold, silver and silk, and transitioned the old Sung currency to its own currency.

What changes were made to paper currency in the 1980s?

There were relatively few changes to U.S. paper currency in the 1980s. No significant design modifications were made to the nation’s currency during the decade, and sweeping security-related enhancements were still to come in the ’90s.