The Chinese invented paper money in the 9th century AD. For much of its history, China used gold, silver and silk for large sums, and bronze for everyday transactions. The notion of using paper as money is almost as old as paper itself. The first paper banknotes appeared in China about 806 AD. An early use of paper was for letters of credit transferred over large distances, a practice which the government quickly took over from private concerns. The Chinese, with their great gift for pragmatism, labeled this practice “flying money” (Temple, 2007). The first real use of a paper money system was in Szechwan province, an isolated area subject to frequent copper shortages (which is a component of bronze). It had reverted to an iron currency of coins, and paper was a welcome option. Iron banks sprang up to facilitate the trade, and the government was quick to take over the profitable enterprise. Amazingly, the Chinese only used paper money
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