Detailed Information About Paper Banknote

by Play Movie Money Paper Money

The paper money is an instrument made by a bank that acts as a negotiable promissory note and is paid to the bearer on the demand. The banknotes were originally issued by the commercial banks who in return take gold or silver coins to redeem the notes. The banknotes were only issued at the face value and traded at the face value only which us issued by the issuing bank.Now this work of commercial bank is taken over by the National banks which is issued by the Central Bank.

Paper currency was initially created in the Tang dynasty China in the 7^th Century but still did not come into appearance till the 11^th Century. Later with time when it was Mongol Empire to rule and Yuan Dynasty in appearance, usage of paper notes came into being.

Now the modern notes have come into existence which was firstly initiated by Bank of England.Paper money in today's world is the most reliable and acceptable form. The majority of the countries use their paper notes to run an economy but few countries who use the same paper money are EURO and US Dollar. The paper money is designed and issued by the government of the country. There is a term called Fiat money, which means that the cost of the basic raw material required for the paper note is not the same as the cost of the value created by that paper. Most of the paper money is fiat money and the worth of that note comes by a government representing it.

Many people use paper notes only because they need it. Earlier there was a barter system where people used to exchange goods with goods and there was no money, but then the value of the good exchanged was not worth running an economy. Now as the paper note has come into existence, people exchange for any goods or services they need and thus leading to the flow of money. But today money in the form of paper note is not the only way to transact but many companies have started using shares of their own company to buy and sell the share, which means shares bought with shares. These paper notes are called representative paper money as they need not be backed by gold or silver but can be converted into any worth, which is required. Now the era is trying to change people from using paper notes to plastic money or e-money, which is good and safe.