The Origins of Paper Money in China

The idea of paper money may seem like a modern concept, but it has a rich history that dates back thousands of years to ancient China. The first recorded use of paper money was during the Tang Dynasty, around the year 1000 AD.

Paper money was initially used as a form of IOU, with merchants and traders exchanging notes that promised to pay a certain amount of goods or services. This early paper money was known as "jiaozi", and it was used primarily in the city of Sichuan.

The use of paper money became more widespread during the Song Dynasty, around the 12th century. It was used to pay taxes, and its value was backed by the government.

Paper money originated in China during the Tang dynasty as a larger denomination of currency to replace the bulky 'bolt of silk' and heavy 'strings of cash'.

The first paper money was called 'Flying money' and was an official printed receipt that was far more convenient and safer to transport compared to the alternatives for large transactions.

It was printed in color on special paper and had a limited life, needing to be replaced or exchanged within three years.

Initially, paper money was mistrusted when it was brought in by Wang Anshi, but by the end of the Song dynasty, paper money equivalent to 70 million strings of cash were being printed and became preferred to coins.

The rulers imposed tight control over the supply of paper money so it could be trusted by the people.

Marco Polo was so impressed with the paper money system that a whole chapter of his book 'The Travels of Marco Polo' was devoted to describing it, leading to the adoption of paper money in Europe.

In the late Qing period, there were many independent banks that all printed their own notes, leading to a proliferation of paper money in China.

The modern paper currency in China is called the 人民币, or 'People's Currency', and is denoted in yuan, which is subdivided into 10 角, or jiao.

In the Tang dynasty, paper money was first introduced as a larger denomination of currency to replace the cumbersome 'bolt of silk' and heavy 'strings of cash'.

Paper money was initially called 'Flying money' and was an official printed receipt.

It was printed in color on special paper and had a limited life, requiring replacement or exchange within three years.

The rulers of the Song dynasty imposed tight control over the supply of paper money to make it trustworthy.

Cowrie shells were used as currency as far back as the Shang dynasty [1600-1100BCE]. They were valued for their rarity and authenticity.

The character for cowrie shells, Bèi 贝, is still used today in Chinese words for precious things. It's a radical in the Chinese words for jiàn 贱 (cheap; worthless), 贵guì (precious; expensive; honorable), and cái 财 (riches; valuables).

Cowrie shells probably originated from either the South China Sea or the Indian Ocean. This limited their availability, allowing for tight control over their use as currency.

The use of cowrie shells as currency continued in remote southwestern parts of China up to the Ming dynasty.

Cash coins were a significant form of currency in ancient civilizations. They were made from precious metals like gold, silver, and copper.

The earliest known cash coins were minted in ancient Lydia around 560 BCE. These coins were made from electrum, a naturally occurring alloy of gold and silver.

In ancient Greece, cash coins were used for transactions and as a store of value. They were often stamped with official marks to guarantee their authenticity.

The use of cash coins spread throughout the ancient world, with various civilizations adopting their own designs and materials. They were used for everyday transactions, as well as for larger purchases and trade.

The value of cash coins was often tied to the value of the metal they were made from, making them a reliable form of currency.

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Silver money was a unique form of currency in China, often cast in the shape of a boat or shoe and known as 'sycee' abroad.

In northern China, these silver ingots were referred to as 元宝 (yuán bǎo). They were produced in much smaller quantities compared to coins.

Very few silver ingots were produced, and they were cast by hand, which made them quite labor-intensive.

Silver and gold were considered of similar value in China, a fact that's hard to believe given our modern understanding of their relative values.

The alchemist's dream in China was to transmute base metal into silver, not gold.

The use of silver increased during the Song dynasty, with a total tax of 18 million ounces of silver collected by 1120CE.

The Spanish Peso was accepted as currency in ports engaged in foreign trade, thanks to an increased supply of silver from Mexico and South America.

This influx of silver had a significant impact on China's economy, leading to a shortage of silver in the later Qing dynasty.

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Paper money originated in China during the Tang dynasty as a larger denomination of currency to replace the bulky 'bolt of silk' and heavy 'strings of cash'.

The first paper money was called 'Flying money' 飞钱 fēi qián, an official printed receipt that was far more convenient and safer to transport compared to the alternatives for large transactions.

It was printed in color on special paper, up to six colors by 1107CE, and had a limited life, requiring replacement or exchange within three years.

Initially, paper money was mistrusted, but by the end of the Song dynasty, paper money equivalent to 70 million strings of cash were being printed and became preferred to coins.

The rulers imposed tight control over the supply of paper money to gain the people's trust.

Marco Polo was so impressed by the paper money system that he devoted a whole chapter of his book 'The Travels of Marco Polo' to describing it.

This led to the adoption of paper money in Europe.

The Yuan dynasty tried to maintain the paper currency but inflation proved ruinous.

Today, China's modern paper currency is the 人民币 rén mín bì 'People's Currency', denominated in yuan (CN¥) 元yuán.