History of Paper Money: From Tang China to Polymer, a 1,300-Year Timeline
Paper money has been invented, abandoned and reinvented more times than most people realise. It began in China with merchants who were tired of carrying copper, reached Europe because Swedish coins weighed 20 kilos, went off gold entirely in 1971, and turned into plastic in Australia in 1988. This is the whole arc in one dated timeline, with each era linking to the page that covers it in depth.
Jiaozi, 10th century Bank of England, 1694 Gold window closed, 1971 First polymer note, 1988
Last updated: September 2026
Paper money is any paper used as money; a banknote is a printed, transferable promise issued by a bank and payable to the bearer; fiat money is currency that has value because a state says so rather than because it converts into metal. China invented all three in stages between the 9th and 13th centuries. Europe followed in 1661.
Paper money, banknote, fiat money: what is the difference?
Paper money is the broad category: any paper that circulates as money. A banknote is the specific instrument, a printed and transferable promise issued by a bank and payable to whoever holds it. Fiat money is money whose value rests on state authority rather than convertibility into metal.
The three are often used interchangeably, and the history makes far more sense once you separate them. Tang dynasty flying cash was paper used in place of money, but it was a named transfer draft and never circulated hand to hand. Sichuan jiaozi were banknotes, because a holder could pass one to anybody and the next holder could still claim the deposit. Yuan and Ming notes were fiat money, because there was no deposit to claim at all.
Europe repeated the same progression. Goldsmiths' receipts and the Bank of Amsterdam's ledger entries were paper claims tied to specific deposits. Johan Palmstruch's credit notes of 1661 broke that link and became banknotes. And every modern currency became fiat money on 15 August 1971, when the last formal link to gold was severed, a shift traced on from the gold standard to fiat money.
The full timeline of paper money
Fifty-two dated milestones, from the Tang recognition of flying cash in 812 to the King Charles III notes of 2024. Each era links to the page that covers it in detail. Dates are drawn from the issuing institutions themselves wherever one exists: Sveriges Riksbank, the Bank of England, the Reserve Bank of Australia, the US Currency Education Program and the European Central Bank.
| Year | Place | Issuer | What happened | Why it mattered |
|---|---|---|---|---|
| 812 | Tang China | Tang state | Flying cash (feiqian) officially recognised, transferring coin between capital and provinces for a fee | A transfer draft, not currency, but it taught commerce to trust paper claims. See the first paper money in China |
| 10th century | Sichuan, China | Private merchant houses | Jiaozi issued against deposits of iron coin; the sixteen largest houses standardise the design | The first true banknotes |
| 1023 | Yizhou (Chengdu) | Song government | Paper-Notes Office founded on the proposal of Xue Tian | The state takes paper money out of private hands |
| 1024 | Sichuan | Song government | First government series of jiaozi issued | The world's first viable paper currency |
| 1107 | Sichuan | Song government | Jiaozi replaced by the qianyin note | The first recorded replacement of one paper currency by another |
| Mid-1150s | Northern China | Jin dynasty | Jiaochao issued in twelve denominations, 100 wen to 10 guan | Paper money spreads beyond Song territory |
| About 1160 | Southern Song | Ministry of Revenue | Huizi issued, permanent from 1170, on a three-year issue cycle | Paper becomes national rather than regional money |
| After 1207 | Southern Song | Ministry of Revenue | Convertibility abandoned under war pressure and issues grow enormous | The first documented slide from convertible paper to fiat |
| 1260 | Yuan China | Kublai Khan | Zhongtong chao issued as a single currency for the whole empire | Yuan notes are the oldest that still survive. See the oldest banknotes still in existence |
| 1287 | Yuan China | Yuan state | Zhiyuan chao replaces the old notes at five old for one new | Devaluation by decree, applied to every holder at once |
| Late 13th century | Khanbalik | Marco Polo | Polo describes the imperial mint making notes from mulberry bark | Europe hears about paper money and refuses to believe it |
| 1374 to 1375 | Ming China | Ming state | Supervisorate founded, then the first Da Ming Baochao issued | The largest bill produced in China and the best-known early survivor |
| About 1425 | Ming China | Ming state | Use of paper money suspended | China abandons paper for centuries and returns to silver |
| About 1600 | Ise Yamada, Japan | A local priest and merchant | Yamada Hagaki issued as a deposit receipt and circulates locally as money | Japan's earliest paper money. See Japanese banknote history |
| 1624 | Sweden | Swedish Crown | Copper standard introduced because silver and gold were scarce | Creates the weight problem that forces Europe to paper |
| 1644 | Sweden | Swedish Crown | The largest copper plate coin weighs almost 20 kilos | The practical case for a printed promise |
| 1656 | Stockholm | Johan Palmstruch | Charters granted on 30 November for an exchange bank and a loan bank | Sweden's first bank. See Europe's first banknotes |
| 1661 | Stockholm | Stockholms Banco | Credit notes issued that are not tied to any particular deposit | The first real banknotes in Europe |
| 1664 | Stockholm | Council of the Realm | Loans called in, credit notes withdrawn, liquidation begins | Europe's first banknote failure, three years after its first banknote |
| 1668 | Stockholm | Riksens Ständers Bank | A state bank founded from the ruins of Stockholms Banco | The world's oldest central bank, today's Sveriges Riksbank |
| 1685 | New France | Colonial administration | Playing cards signed and valued as currency during a coin shortage | The earliest paper currency in North America |
| 1690 | Massachusetts | Massachusetts Bay Colony | Bills of credit issued to pay soldiers returning from Quebec | The birth of paper currency in what became the United States. See the history of US paper money |
| 27 July 1694 | London | Bank of England | Founded as a private bank to fund the war with France, issuing running cash notes at once | The template for central-bank note issue. See Bank of England note history |
| 1695 | Denmark-Norway | Jørgen Thor Møhlen | A royal grant to issue notes valid up the Norwegian coast | An early private issue the public would not trust |
| 1716 | France | Banque Générale | John Law issues paper money against gold, guaranteed by the regent from 1718 | Paper money reaches France |
| 1720 | Paris and London | John Law; South Sea Company | Law's bank goes bankrupt and the South Sea Bubble bursts in the same year | Two paper collapses in twelve months, on both sides of the Channel |
| 1725 | London | Bank of England | First denominated part-printed notes, £20 upwards in £10 steps to £90 | Standardisation replaces the bespoke handwritten note |
| 1739 | Philadelphia | Benjamin Franklin | Colonial notes printed with nature prints cast from real leaves | An original security feature. See the history of counterfeiting |
| 1743 | London | Bank of England | Printed sum blocks introduced, white letters on black | Security printing becomes deliberate design |
| 1775 | Philadelphia | Continental Congress | Continental Currency authorised to fund the Revolutionary War | America's first national paper money. See Continental Currency |
| 1789 to 1796 | France | National Assembly | Assignats issued against confiscated church land, then printed far past it | The first great fiat collapse. See French assignats |
| 1797 | London | Bank of England | The Restriction Period begins and the first £1 and £2 notes are issued, on 2 March | Notes stop being convertible into gold and become money in themselves |
| 18 January 1800 | Paris | Banque de France | Founded at Napoleon's instigation; Paris issue privilege 1803, national monopoly 1848 | A cautious return to paper after the assignats |
| 1835 | Sweden | Sveriges Riksbank | First banknotes with a modern appearance, on coloured paper in horizontal format | The design conventions still in use today |
| 1844 | United Kingdom | Parliament | Bank Charter Act formalises note issuance and restricts other issuers | Note issue concentrates in the central bank |
| 1861 | United States | US Treasury | Demand Notes issued, the first greenbacks | All US currency issued since 1861 remains valid. See greenbacks and legal tender notes |
| 1862 to 1863 | United States | Treasury and Congress | United States Notes, the Treasury seal, and the National Banking System | The foundations of modern US currency design |
| 1874 to 1878 | Washington | Bureau of Engraving and Printing | The BEP is established and given the printing mandate; Silver Certificates follow in 1878 | One government printer for the nation. See silver certificates |
| 1913 to 1914 | United States | Federal Reserve | Federal Reserve Act passed, then the first $10 Federal Reserve Notes issued | The note in an American wallet today |
| 1923 | Germany | Reichsbank | The Papiermark collapses and the Rentenmark arrives in November | The most famous hyperinflation. See Weimar Germany |
| 1931 | United Kingdom | Bank of England | The gold standard is suspended in September after a run on sterling | A major currency cuts its gold link |
| July 1944 | Bretton Woods | Delegates of 44 nations | Currencies fixed to the dollar, the dollar fixed to gold at $35 an ounce; the IMF and World Bank created | The last international gold anchor |
| 1946 | Hungary | Hungarian state | The pengő collapses and the forint replaces it on 1 August | The most extreme hyperinflation on record. See every hyperinflation ranked |
| 15 August 1971 | Washington | President Nixon | The gold window closes, ending dollar convertibility at $35 an ounce | Every major currency becomes fiat. See gold standard to fiat money |
| January 1988 | Australia | Reserve Bank of Australia and CSIRO | The world's first polymer banknote, a $10 commemorative for the bicentenary | Paper money stops being paper. See polymer versus paper |
| 1992 to 1996 | Australia | Reserve Bank of Australia | A complete polymer series progressively replaces the paper notes | The first country fully on polymer. See Australian banknote history |
| 1999 to 2002 | Euro area | European Central Bank | The euro launches as an accounting currency in 1999 and as cash on 1 January 2002 | Twelve currencies retired at once. See euro banknote history |
| 2008 to 2009 | Zimbabwe | Reserve Bank of Zimbabwe | The 100 trillion dollar note is dated 2008, released in January 2009 and withdrawn that April | The highest denomination of the modern era. See Zimbabwe |
| 13 September 2016 | United Kingdom | Bank of England | The first Bank of England polymer note, the £5 featuring Sir Winston Churchill | Polymer reaches one of the oldest note issuers |
| 8 November 2016 | India | Reserve Bank of India | The 500 and 1,000 rupee notes are withdrawn overnight | The largest modern demonetization. See what is demonetization |
| 2021 | Canada and Switzerland | Bank of Canada; Swiss National Bank | Canada removes legal tender status from five denominations on 1 January; the SNB recalls its eighth series on 30 April | Two different approaches to retiring old notes |
| 5 June 2024 | United Kingdom | Bank of England | The first notes bearing King Charles III enter circulation | The first change of monarch on Bank of England notes |
Where did paper money begin?
In Sichuan, in the 10th century, among private merchant houses that issued printed receipts against deposits of iron coin. The Song government founded a Paper-Notes Office in 1023 and issued its own first series in 1024, which the National Bank of Belgium's museum records as the year the state took the issuing monopoly.
China had the two technologies a banknote needs, paper and printing, centuries before anyone else (National Bank of Belgium Museum), and it had the economic problem that makes paper attractive: a chronic shortage of the copper its coinage was made from. Six centuries of experiment followed, through Song huizi, Jin jiaochao, the empire-wide chao of Kublai Khan and the Ming Da Ming Baochao, before the Ming suspended paper money around 1425. Guinness World Records recognises the Sichuan issue as the first paper money and records that no Song specimens survive (Guinness World Records). Each stage is set out on the first paper money in China.
When did Europe start printing banknotes?
In 1661, when Stockholms Banco issued credit notes in Sweden. Sveriges Riksbank states on its own timeline that Stockholms Banco issued the first real banknotes in Europe, roughly six and a half centuries after China.
The trigger was physical. Sweden's copper standard of 1624 produced plate coins so heavy that the largest weighed almost 20 kilos, and the Riksbank says their inconvenience contributed directly to the first banknotes (Sveriges Riksbank). Johan Palmstruch's bank over-issued and collapsed within a few years, and the state bank founded in 1668 from its ruins became the world's oldest central bank.
The durable model arrived in London. The Bank of England was founded on 27 July 1694 to lend to the government and fund the war with France, opened on 1 August with 17 clerks and two gatekeepers, and issued handwritten running cash notes from the start (Bank of England). France's own experiments, John Law's bank of 1716 and the assignats of the Revolution, both ended badly. The full comparison is on Europe's first banknotes.
How did paper money develop in the United States?
It began in the colonies before it began at the Bank of England. The US Currency Education Program dates the birth of American paper currency to 1690, when the Massachusetts Bay Colony issued notes to fund military expeditions, and other colonies took up the practice quickly.
The colonial era gave way to Continental Currency in 1775, and the modern system was built during the Civil War: Demand Notes in 1861, United States Notes and the Treasury seal in 1862, and the National Banking System in 1863. The Bureau of Engraving and Printing was established in 1874 and given its printing mandate in 1877, Silver Certificates followed in 1878, and the Federal Reserve Act of 1913 produced the first $10 Federal Reserve Notes in 1914 (US Currency Education Program).
One consequence of that continuity is remarkable. The US Currency Education Program states that "All U.S. currency issued since 1861 remains valid and redeemable at full face value". A Demand Note printed during the Civil War is still money. Very few issuers anywhere can say anything like it, and it is why the United States sits at the top of any list of the oldest notes still honoured (oldest banknotes still in existence).
The whole national story, series by series, sits on the history of US paper money.
When did money stop being backed by gold?
In stages, and finally on 15 August 1971. Britain suspended the gold standard in September 1931. Bretton Woods in July 1944 fixed the dollar to gold at $35 an ounce and other currencies to the dollar. Nixon closed the gold window in 1971, which ended the arrangement.
The 1944 conference at Bretton Woods brought delegates from 44 nations together, created the International Monetary Fund and the institution that became the World Bank, and kept currencies fixed but adjustable within a 1 per cent band against the dollar (Federal Reserve History). By the late 1960s more dollars were held abroad than the United States held in gold, and on the evening of 15 August 1971 President Nixon announced that foreign governments could no longer convert dollars into gold at the fixed rate (Federal Reserve History).
Every banknote issued since then is fiat money in the strict sense: its value rests on confidence in the issuer. That is exactly the arrangement the Yuan and Ming dynasties ran, and the reason their record is worth studying. See gold standard to fiat money.
What happens when paper money fails?
The same sequence, every time, across a thousand years. An issuer promises convertibility, a war or fiscal emergency arrives, convertibility is suspended, issuance expands, and the currency loses value until it stops working as money.
The Southern Song abandoned convertibility after 1207. Stockholms Banco over-issued in 1663 and was in liquidation by 1664. John Law's bank failed in 1720. Revolutionary France printed assignats against land it could not deliver. Germany's Papiermark collapsed in 1923 and was replaced by the Rentenmark that November. Hungary's pengő collapse of 1946 remains the most extreme on record, and Zimbabwe produced the 100 trillion dollar note of 2008.
Those episodes are also why so much historical paper survives in good condition. A currency withdrawn abruptly leaves behind notes that were never spent. The full standings are on every hyperinflation ranked, the German case on Weimar Germany, the Hungarian record on Hungary 1946, and the mechanics of an overnight withdrawal on what is demonetization.
How did banknotes end up made of plastic?
Australia did it first. In January 1988 the Reserve Bank of Australia issued a polymer $10 commemorative banknote for the bicentenary, developed jointly with CSIRO, and it was a world first. A complete polymer series progressively replaced the paper notes between 1992 and 1996.
The Australian programme was a joint effort by the Reserve Bank and CSIRO, and a complete polymer series progressively replaced the paper notes between 1992 and 1996 (Reserve Bank of Australia). Other issuers followed over the next three decades. When the Bank of England released its first polymer note, the £5 featuring Sir Winston Churchill, on 13 September 2016, it described polymer as a thin, flexible plastic material that lasts longer, stays cleaner and is harder to counterfeit than paper banknotes (Bank of England). All four denominations it now circulates are printed on polymer.
The change is bigger than the material. It ends the era in which the phrase "paper money" was literally true. The comparison, including what it means for collectors handling and storing both kinds, is on polymer versus paper banknotes.
How do you collect the history of paper money?
By era rather than by country, if you want the story in your hands. Nothing before the 18th century is realistically obtainable, but from the French Revolution onward almost every chapter in the timeline above has an affordable representative.
A workable set of ten notes covers most of the arc: an assignat for the first fiat collapse, a 19th-century private or provincial note, a US silver certificate, a Weimar trillion-mark note, a Hungarian pengő, a pre-euro national note, a Zimbabwe trillion, an Indian note withdrawn in 2016, an early polymer issue, and a current note from your own country. Each one is a dated milestone you can hold.
Buy the best grade you can afford, since condition drives value far more than age, and buy from a dealer that documents where notes come from. Start with how to collect world banknotes, then browse banknotes by country. If you want to know which notes from this timeline still physically exist, see the oldest banknotes still in existence.
Planet Banknote is a family-owned dealership in Sarasota, Florida, founded in 2021. Every note is sourced direct from mints, central banks, and authorized distributors, inspected through our Planet Banknote Verified process, and ships with a free Certificate of Authenticity. US orders ship free via USPS Priority, and every order includes a free bonus gift.
Frequently asked questions
Who invented paper money?
China did. Private merchant houses in Sichuan issued the first true banknotes, called jiaozi, during the 10th century, backed by deposits of iron coin. The Song government founded a Paper-Notes Office in 1023 and printed its own first series in 1024. Europe did not produce a banknote until Stockholms Banco did so in 1661.
What is the difference between paper money and a banknote?
Paper money is the broad category, meaning any paper that circulates as money. A banknote is the specific instrument: a printed, transferable promise issued by a bank and payable to whoever holds it. Tang flying cash was paper money but not a banknote, because it was a named transfer draft rather than something that passed from hand to hand.
When did the first banknotes appear in Europe?
In 1661, when Stockholms Banco issued credit notes in Sweden. Sveriges Riksbank states that these were the first real banknotes in Europe. They appeared because Sweden's copper plate coins had become impossibly heavy, with the largest weighing almost 20 kilos. The Bank of England followed, founded on 27 July 1694.
When did paper money stop being backed by gold?
On 15 August 1971, when President Nixon closed the gold window and ended the ability of foreign governments to convert dollars into gold at 35 dollars an ounce. Britain had suspended the gold standard in September 1931, and the Bretton Woods system of 1944 had been the last international gold anchor.
What was the first polymer banknote?
An Australian 10 dollar commemorative note issued in January 1988 for the bicentenary, developed jointly by the Reserve Bank of Australia and CSIRO. It was a world first. Australia then replaced its entire paper series with polymer between 1992 and 1996, and the Bank of England issued its first polymer note in September 2016.
How old is paper money?
Roughly 1,300 years old if you count from the Tang recognition of flying cash in 812, and about a thousand years if you count from the first true banknotes, the Sichuan jiaozi of the 10th century. Government-issued paper money dates from 1024. European banknotes are much younger, beginning in 1661.
Do any of the earliest banknotes still exist?
Some do. Yuan dynasty notes issued from 1260 survive in the National Museum of China, and Ming 1 guan notes from 1375 are held by the British Museum and the Smithsonian. No Song dynasty notes are known to survive, although a printing plate dated to around 1023 has been found.