World History


A World History of Paper Currency


A Beginning in Asia


Paper money first appeared in Asia long before the Western world. This fact should not be surprising considering paper was invented in China in the 2nd Century AD, approximately 1,000 years before it arrived in Europe.

Called flying money, paper notes first appeared in the Chinese province of Sichuan during the reign of Emperor Hsien Tsung. They represented a deposit of iron coins and were issued by important families and had no official state authorization. The notes became so popular that the government eventually stood behind these notes and issued a law punishing counterfeiters with death. None are known to exist today.

Eventually, under the Sung Dynasty, the government issued its own paper money, called convenient money. Its management was held in the capital Ch'angan. These notes had their own denomination system and were convertible every three years. They later experienced a currency feature very common today: inflation.


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