How Did Paper Money, Which Has Become a Significant Part of Our Daily Lives, Originate?

Money, with a history dating back to the ancient Lydian civilization, has played a significant role in our lives. This journey, which started with coins and continued with banknotes, has made paper money one of the most commonly used financial instruments, remaining so even today. So, where did paper money come from?

Its story began in the Far East!

The origins of paper money can be traced to the Tang Dynasty, which was located in what is now China. However, it was the Song Dynasty that truly popularized its use. Merchants began using paper money as a form of promissory note due to the impracticality of carrying coins. Recognizing the effectiveness of this practice in trade, the Song Dynasty initiated the production of paper money. It is said that the amount of paper money in circulation during the 12th century was equivalent to twenty-six million coins.

It reached Europe thanks to a famous explorer.

During this period in Europe, the Knights Templar used receipts to represent the value of precious items they acquired. The introduction of paper money to Europe took place in the 13th century following the visit of explorer Marco Polo to the Yuan Dynasty. Polo’s descriptions of paper money had a profound impact on many Europeans.

Marco Polo’s words piqued the interest of the European public.

“All these pieces of paper are, issued with as much solemnity and authority as if they were of pure gold or silver; and on every piece a variety of officials, whose duty it is, have to write their names, and to put their seals. And when all is prepared duly, the chief officer deputed by Kubilai brings it to the mint, and by means of a machine graven with the seal of Kubilai has the sum printed in the note. This is done with so much neatness and despatch that it is marvellous to see.” — Marco Polo

Italy led the way in this trend.

Thus, this technology began to be used in Italy. The word “banknote” comes from the Italian term “nota di banco.”

The transition was expedited thanks to the Price Revolution.

In Europe, the transition to paper money was primarily driven by the Price Revolution, which occurred during a period of high inflation. Subsequently, banknotes in denominations ranging from twenty to one thousand were introduced by the Bank of England.

It has come down from the past and reached us today.

Thanks to Chinese merchants in the 11th century, we use paper money or credit cards instead of coins today. We are grateful to the people of the past for this invention that has made our lives easier.