Global InformationBanknote information
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A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender (usually gold or silver coin) when presented to the chief cashier of the originating bank. These commercial banknotes only traded at face value in the market served by the issuing bank.[1] Commercial banknotes have primarily been replaced by national banknotes issued by central banks or monetary authorities.
National banknotes are often – but not always – legal tender, meaning that courts of law are required to recognize them as satisfactory payment of money debts.[2] Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. This practice of "backing" notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Today, most national currencies have no backing in precious metals or commodities and have value only by fiat. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.
Code of Hammurabi Law 100 (c. 1755–1750 BC) stipulated repayment of a loan by a debtor to a creditor on a schedule with a maturity date specified in written contractual terms.[3][4][5] Law 122 stipulated that a depositor of gold, silver, or other chattel/movable property for safekeeping must present all articles and a signed contract of bailment to a notary before depositing the articles with a banker, and Law 123 stipulated that a banker was discharged of any liability from a contract of bailment if the notary denied the existence of the contract. Law 124 stipulated that a depositor with a notarized contract of bailment was entitled to redeem the entire value of their deposit, and Law 125 stipulated that a banker was liable for replacement of deposits stolen while in their possession.[6][7][5]
In China during the Han dynasty, promissory notes appeared in 118 BC and were made of leather.[8] Rome may have used a durable lightweight substance as promissory notes in 57 AD which have been found in London.[9] However, Carthage was purported to have issued bank notes on parchment or leather before 146 BC. Hence Carthage may be the oldest user of lightweight promissory notes.[10][11][12] The first known banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century. Its roots were in merchant receipts of deposit during the Tang dynasty (618–907), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions.[13][14][15] During the Yuan dynasty (1271–1368), banknotes were adopted by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 13th century by travelers such as Marco Polo,[16][17] with European banknotes appearing in 1661 in Sweden.
Counterfeiting, including the forgery of banknotes, is an inherent challenge in issuing currency. It is countered by anticounterfeiting measures in the printing of banknotes. Fighting the counterfeiting of banknotes and cheques has been a principal driver of security printing methods development in recent centuries.
- ^ Atack & Passell (1994), p. 469.
- ^ "Legal Tender Guidelines". British Royal Mint. Archived from the original on 17 December 2008. Retrieved 2 September 2007.
- ^ Hammurabi (1903). "Code of Hammurabi, King of Babylon". Records of the Past. 2 (3). Translated by Sommer, Otto. Washington, DC: Records of the Past Exploration Society: 75. Retrieved 20 June 2021.
100. Anyone borrowing money shall ... his contract [for payment].
- ^ Hammurabi (1904). "Code of Hammurabi, King of Babylon" (PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd ed.). Chicago: University of Chicago Press. p. 35. Archived (PDF) from the original on 13 June 2021. Retrieved 20 June 2021.
§100. ...he shall write down ... returns to his merchant.
- ^ a b Hammurabi (1910). "Code of Hammurabi, King of Babylon". Avalon Project. Translated by King, Leonard William. New Haven, CT: Yale Law School. Archived from the original on 10 May 2021. Retrieved 20 June 2021.
- ^ Hammurabi (1903). "Code of Hammurabi, King of Babylon". Records of the Past. 2 (3). Translated by Sommer, Otto. Washington, DC: Records of the Past Exploration Society: 77. Retrieved 20 June 2021.
122. If anyone entrusts to ... have committed an offence.
- ^ Hammurabi (1904). "Code of Hammurabi, King of Babylon" (PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd ed.). Chicago: University of Chicago Press. p. 43. Archived (PDF) from the original on 13 June 2021. Retrieved 20 June 2021.
§122. If a man give ... it from the thief.
- ^ "The History of Money". pbs.org – Nova. 26 October 1996. Archived from the original on 25 August 2017. Retrieved 24 August 2017.
- ^ "Ancient Roman IOUs Found Beneath Bloomberg's New London HQ". 1 June 2016. Archived from the original on 10 April 2019. Retrieved 9 June 2018.
- ^ Jones, John Percival (1890). Speeches of J.P. Jones: Money and Tariff, 1890–93. Archived from the original on 1 July 2023. Retrieved 24 August 2017.
- ^ Moulton, Luther Vanhorn (1880). The Science of Money and American Finances. Co-operative Press. p. 134.
- ^ Wells, H. G. (1921). The outline of history, being a plain history of life and mankind. New York: The Macmillan Company.
- ^ Ebrey, Walthall & Palais (2006), p. 156.
- ^ Bowman (2000), p. 105.
- ^ Gernet (1962), p. 80.
- ^ William N. Goetzmann; K. Geert Rouwenhorst (2005). The Origins of Value: The Financial Innovations that Created Modern Capital Markets. Oxford University Press. p. 94. ISBN 978-0-19-517571-4.
The Mongols adopted the Jin and Song practice of issuing paper money, and the earliest European account of paper money is the detailed description given by Marco Polo, who claimed to have served at the court of the Yuan dynasty rulers.
- ^ Marco Polo (1818). The Travels of Marco Polo, a Venetian, in the Thirteenth Century: Being a Description, by that Early Traveller, of Remarkable Places and Things, in the Eastern Parts of the World. pp. 353–355. Archived from the original on 1 July 2023. Retrieved 19 September 2012.