History Of Paper Money..
March 09, 08 by FinanceTurfA currency is the dominant medium of exchange. A currency is a unit of exchange, facilitating the transfer of goods and/or services. It is one form of money, where money is anything that serves as a medium of exchange, a store of value, and a standard of value..
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Ages of Currency…
Early currency
The origin of currency is the creation of a circulating medium of exchange based on a unit of account which quickly becomes a store of value.
Currency was basically evolved from two innovations: the use of counters to assure that shipments arrived with the same goods that were shipped, and later with the use of silver ingots(a metal casting that is shaped, typically in an oblong, for easy working or for recasting) to represent stored value in the form of grain.
Both of these developments had occurred by 2000 BC. Originally money was a form of receipting grain stored in temple granaries in ancient Egypt and Mesopotamia.
This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade over 1500 years.
However, the collapse of the Near Eastern trading system pointed to a flaw: in an era where there was no place that was safe to store value, the value of a circulating medium could only be as sound as the forces that defended that store.
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Coinage
At first silver, then both silver and gold were used. Metals were mined, weighed, and stamped into coins. Coins could be counterfeited, but they also created a new unit of account, which helped lead to banking.
In most major economies using coinage, copper, silver and gold formed three tiers of coins.
Gold coins were used for large purchases, payment of the military and backing up of state activities.
Silver coins were used for large, but common, transactions, and as a unit of account for taxes, dues, contracts and fealty, while copper coins represented the coinage of common transaction. This system had been used in ancient India since the time of the Mahajanapadas.
In Europe, this system worked through the medieval period because there was virtually no new gold, silver or copper introduced through mining or conquest.
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Era of hard and credit money
In pre modern China, the need for credit and for circulating a medium that was less of a burden than exchanging thousands of copper coins led to the introduction of paper money, commonly known today as banknotes.
It began as a means for merchants to exchange heavy coinage for receipts of deposit issued as promissory notes from shops of wholesalers, notes that were valid for temporary use in a small regional territory.
Innovations introduced by Muslim economists, traders and merchants include the earliest uses of credit, cheques, promissory notes, savings accounts, transactional accounts, loaning, trusts, exchange rates, the transfer of credit and debt, and banking institutions for loans and deposits.
In Europe paper money was first introduced in Sweden in 1661. Sweden was rich in copper, thus, because of copper’s low value, extraordinarily big coins (often weighing several kilograms) had to be made. Because the coin was so big, it was probably more convenient to carry a note stating your possession of such a coin than to carry the coin itself.
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The advantages of paper currency were numerous: it reduced transport of gold and silver, and thus lowered the risks; it made loaning gold or silver at interest easier.
However, these advantages held within them the disadvantages too. First, since a note has no intrinsic (initial) value, there was nothing to stop issuing authorities from printing more of it. Second, because it created money that did not exist, it increased inflationary pressures.
Legal era
At this time both silver and gold were considered legal tender, and accepted by governments for taxes.
By 1900, most of the industrializing nations were on some form of gold standard, with paper notes and silver coins constituting the circulating medium. Governments then followed this following rule: keeping gold and silver paid, but paying out in notes.
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Paper money era
Then finally came the paper money era which is still in use.
Some other bank notes of the World are:-
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