Bank Notes Origins

About Bank Notes Origins

Paper money was invented in China during the Tang Dynasty around 800 AD and became government policy under the Song Dynasty around 1000 AD. The concept reached Europe through Marco Polos accounts, which described paper money with amazement. European paper money emerged independently in Sweden in 1661 when Stockholms Banco issued the first European banknotes. The Bank of England began issuing permanent banknotes in 1694. Banknotes were originally receipts for gold deposited with banks. Over time, the receipts circulated as money. The gold backing was gradually removed, culminating in the end of the gold standard in the 20th century. Modern banknotes are fiat currency backed only by government decree and central bank credibility.