Do you know which country issued first paper money? The answer is China. It was issued during the Song dynasty in the 10th century, when China unable to produce coins due to its shortage of copper.
The note was name as jiao zi. For the first time it was issued liberally among the people of China. Thus it was able to take the place of coins that till then were widely used in circulation.
When the paper money was introduced, its face value was written. Some time later the face value was printed and 2 official seals were included
in order to avoid counterfeiting. In addition, the government prohibited any issuance of private notes.
Newly printed paper money, were issued at the end of each period, one period lasting two years. It is worth mentioning that this paper money represented a by-product of empire's block printing. Despite the fact that first notes were issued during the period of Tang Dynasty, which ruled in the period between 618 and 907, it wasn't meant to become institutionalized as a governmental policy. The institutionalization occurred during the Song Dynasty, which reigned between 960 and 1279.
Paper money appeared in China due to several reasons. Firstly, after a great development of the economy and a boom in trade registered in the Northern Song Dynasty, the iron coin sometimes showed its disadvantages, mainly due to the fact that it was small in value and heavy. In addition, during this period, printing showed great results, it was able to produce paper money, which was quite convenient for traders.
Besides jiao zi, Chinese government issued such paper money as: qian yin, xiao chao, guan zi, gong ju, hui zi, and so on. Among them all jiao zi registered the longest time of circulation and hui zi had the largest circulation. Jiao zi, chao yin, and xiao chao were issued during the period of the Northern Song Dynasty, while guan zi, gong ju, and hui zi were printed during the period of the Southern Song Dynasty, which ruled between 1127 and 1279.