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A banknote—also called a bill (
North American English North American English (NAmE, NAE) is the most generalized variety of the English language as spoken in the United States and Canada. Because of their related histories and cultures, plus the similarities between the pronunciations (accents), v ...
), paper money, or simply a note—is a type of negotiable promissory note, made by a
bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
or other licensed authority, payable to the bearer on demand. Banknotes were originally issued by
commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...
s, which were legally required to redeem the notes for
legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in ...
(usually gold or silver coin) when presented to the chief cashier of the originating bank. These commercial banknotes only traded at face value in the market served by the issuing bank. Commercial banknotes have primarily been replaced by national banknotes issued by
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
s or monetary authorities. National banknotes are often – but not always –
legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in ...
, meaning that courts of law are required to recognize them as satisfactory payment of money
debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
s. Historically, banks sought to ensure that they could always pay customers in
coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s when they presented banknotes for payment. This practice of "backing" notes with something of substance is the basis for the history of
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
s backing their currencies in gold or silver. Today, most national currencies have no backing in
precious metal Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Chemically, the precious metals tend to be less reactive than most elements (see noble metal). They are usually ductile and have a high lustre. ...
s or commodities and have value only by fiat. With the exception of non-circulating high-value or precious metal issues,
coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s are used for lower valued monetary units, while banknotes are used for higher values. Code of Hammurabi Law 100 ( 1755–1750 BC) stipulated repayment of a
loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...
by a
debtor A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ...
to a
creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
on a
schedule A schedule or a timetable, as a basic time-management tool, consists of a list of times at which possible tasks, events, or actions are intended to take place, or of a sequence of events in the chronological order in which such things are i ...
with a
maturity date Maturity or immaturity may refer to: * Adulthood or age of majority * Maturity model ** Capability Maturity Model, in software engineering, a model representing the degree of formality and optimization of processes in an organization * Developmen ...
specified in
written Writing is a medium of human communication which involves the representation of a language through a system of physically inscribed, mechanically transferred, or digitally represented symbols. Writing systems do not themselves constitute h ...
contractual term A contractual term is "any provision forming part of a contract". Each term gives rise to a contractual obligation, the breach of which may give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as th ...
s. Law 122 stipulated that a
depositor A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below. ...
of
gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
,
silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
, or other chattel/movable property for safekeeping must present all articles and a signed contract of
bailment Bailment is a legal relationship in common law, where the owner transfers physical possession of personal property ("chattel") for a time, but retains ownership. The owner who surrenders custody to a property is called the "bailor" and the ind ...
to a
notary A notary is a person authorised to perform acts in legal affairs, in particular witnessing signatures on documents. The form that the notarial profession takes varies with local legal systems. A notary, while a legal professional, is disti ...
before depositing the articles with a
banker A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Becaus ...
, and Law 123 stipulated that a banker was discharged of any liability from a contract of bailment if the notary denied the existence of the contract. Law 124 stipulated that a depositor with a notarized contract of bailment was entitled to redeem the entire value of their deposit, and Law 125 stipulated that a banker was
liable In law, liable means "responsible or answerable in law; legally obligated". Legal liability concerns both civil law and criminal law and can arise from various areas of law, such as contracts, torts, taxes, or fines given by government agencie ...
for replacement of deposits
stolen Stolen may refer to: * ''Stolen'' (2009 Australian film), a 2009 Australian film * ''Stolen'' (2009 American film), a 2009 American film * ''Stolen: The Baby Kahu Story'' (2010 film), a film based on the real life kidnapping of baby Kahu Durie ...
while in their
possession Possession may refer to: Law * Dependent territory, an area of land over which another country exercises sovereignty, but which does not have the full right of participation in that country's governance * Drug possession, a crime * Ownership * ...
. In
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
during the
Han dynasty The Han dynasty (, ; ) was an imperial dynasty of China (202 BC – 9 AD, 25–220 AD), established by Liu Bang (Emperor Gao) and ruled by the House of Liu. The dynasty was preceded by the short-lived Qin dynasty (221–207 BC) and a warr ...
, promissory notes appeared in 118 BC and were made of leather.
Rome , established_title = Founded , established_date = 753 BC , founder = King Romulus (legendary) , image_map = Map of comune of Rome (metropolitan city of Capital Rome, region Lazio, Italy).svg , map_caption ...
may have used a durable lightweight substance as promissory notes in 57 AD which have been found in
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
. However,
Carthage Carthage was the capital city of Ancient Carthage, on the eastern side of the Lake of Tunis in what is now Tunisia. Carthage was one of the most important trading hubs of the Ancient Mediterranean and one of the most affluent cities of the classi ...
was purported to have issued bank notes on parchment or leather before 146 BC. Hence Carthage may be the oldest user of lightweight promissory notes. The first known banknote was first developed in China during the
Tang Tang or TANG most often refers to: * Tang dynasty * Tang (drink mix) Tang or TANG may also refer to: Chinese states and dynasties * Jin (Chinese state) (11th century – 376 BC), a state during the Spring and Autumn period, called Tang (唐) b ...
and
Song A song is a musical composition intended to be performed by the human voice. This is often done at distinct and fixed pitches (melodies) using patterns of sound and silence. Songs contain various forms, such as those including the repetitio ...
dynasties, starting in the 7th century. Its roots were in merchant
receipt A receipt (also known as a packing list, packing slip, packaging slip, (delivery) docket, shipping list, delivery list, bill of the parcel, manifest, or customer receipt) is a document acknowledging that a person has received money or propert ...
s of deposit during the Tang dynasty (618–907), as
merchants A merchant is a person who trades in commodities produced by other people, especially one who trades with foreign countries. Historically, a merchant is anyone who is involved in business or trade. Merchants have operated for as long as industry ...
and
wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
rs desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the
Yuan dynasty The Yuan dynasty (), officially the Great Yuan (; xng, , , literally "Great Yuan State"), was a Mongol-led imperial dynasty of China and a successor state to the Mongol Empire after its division. It was established by Kublai, the fifth ...
(1271–1368), banknotes were adopted by the
Mongol Empire The Mongol Empire of the 13th and 14th centuries was the largest contiguous land empire in history. Originating in present-day Mongolia in East Asia, the Mongol Empire at its height stretched from the Sea of Japan to parts of Eastern Europe, ...
. In Europe, the concept of banknotes was first introduced during the 13th century by travelers such as
Marco Polo Marco Polo (, , ; 8 January 1324) was a Venetian merchant, explorer and writer who travelled through Asia along the Silk Road between 1271 and 1295. His travels are recorded in ''The Travels of Marco Polo'' (also known as ''Book of the Marv ...
, with European banknotes appearing in 1661 in Sweden.
Counterfeit To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value tha ...
ing, the
forgery Forgery is a white-collar crime that generally refers to the false making or material alteration of a legal instrument with the specific intent to defraud anyone (other than themself). Tampering with a certain legal instrument may be forbidd ...
of banknotes, is an inherent challenge in issuing
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...
. It is countered by anticounterfeiting measures in the
printing Printing is a process for mass reproducing text and images using a master form or template. The earliest non-paper products involving printing include cylinder seals and objects such as the Cyrus Cylinder and the Cylinders of Nabonidus. The ea ...
of banknotes. Fighting the counterfeiting of banknotes and
cheque A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...
s has been a principal driver of
security printing Security printing is the field of the printing industry that deals with the printing of items such as banknotes, cheques, passports, tamper-evident labels, security tapes, product authentication, stock certificates, postage stamps and identity ...
methods development in recent centuries.


History

Paper currency first developed in
Tang dynasty The Tang dynasty (, ; zh, t= ), or Tang Empire, was an Dynasties in Chinese history, imperial dynasty of China that ruled from 618 to 907 AD, with an Zhou dynasty (690–705), interregnum between 690 and 705. It was preceded by the Sui dyn ...
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
during the 7th century, although true paper money did not appear until the 11th century, during the
Song dynasty The Song dynasty (; ; 960–1279) was an imperial dynasty of China that began in 960 and lasted until 1279. The dynasty was founded by Emperor Taizu of Song following his usurpation of the throne of the Later Zhou. The Song conquered the rest ...
. The use of paper currency later spread throughout the
Mongol Empire The Mongol Empire of the 13th and 14th centuries was the largest contiguous land empire in history. Originating in present-day Mongolia in East Asia, the Mongol Empire at its height stretched from the Sea of Japan to parts of Eastern Europe, ...
or
Yuan dynasty The Yuan dynasty (), officially the Great Yuan (; xng, , , literally "Great Yuan State"), was a Mongol-led imperial dynasty of China and a successor state to the Mongol Empire after its division. It was established by Kublai, the fifth ...
China. European explorers like
Marco Polo Marco Polo (, , ; 8 January 1324) was a Venetian merchant, explorer and writer who travelled through Asia along the Silk Road between 1271 and 1295. His travels are recorded in ''The Travels of Marco Polo'' (also known as ''Book of the Marv ...
introduced the concept in Europe during the 13th century.
Napoleon Napoleon Bonaparte ; it, Napoleone Bonaparte, ; co, Napulione Buonaparte. (born Napoleone Buonaparte; 15 August 1769 – 5 May 1821), later known by his regnal name Napoleon I, was a French military commander and political leader who ...
issued paper banknotes in the early 1800s. Cash paper money originated as receipts for value held on account "value received", and should not be conflated with promissory "sight bills" which were issued with a promise to convert at a later date. The perception of banknotes as money has evolved over time. Originally, money was based on
precious metals Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Chemically, the precious metals tend to be less reactive than most elements (see noble metal). They are usually ductile and have a high lu ...
. Banknotes were seen by some as an
I.O.U. An IOU (abbreviated from the phrase "I owe you") is usually an informal document acknowledging debt. An IOU differs from a promissory note in that an IOU is not a negotiable instrument and does not specify repayment terms such as the time of re ...
or promissory note: a promise to pay someone in precious metal on presentation (see
representative money Representative money or receipt money is any medium of exchange, printed or digital, that represents something of Value (economics), value, but has little or no value of its own (intrinsic value). Unlike some forms of fiat money (which may have n ...
). But they were readily accepted - for convenience and security - in
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
, for example, from the late 1600s onwards. With the removal of precious metals from the monetary system, banknotes evolved into pure
fiat money Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
.


Early Chinese paper money

The first banknote-type instrument was used in
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
in the 7th century, during the
Tang dynasty The Tang dynasty (, ; zh, t= ), or Tang Empire, was an Dynasties in Chinese history, imperial dynasty of China that ruled from 618 to 907 AD, with an Zhou dynasty (690–705), interregnum between 690 and 705. It was preceded by the Sui dyn ...
(618–907). Merchants would issue what are today called promissory notes in the form of
receipt A receipt (also known as a packing list, packing slip, packaging slip, (delivery) docket, shipping list, delivery list, bill of the parcel, manifest, or customer receipt) is a document acknowledging that a person has received money or propert ...
s of deposit to
wholesaler Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In g ...
s to avoid using the heavy bulk of copper coinage in large commercial transactions. Before the use of these notes, the Chinese used coins that were circular, with a rectangular hole in the middle. Coins could be strung together on a rope. Merchants, if they were rich enough, found that the strings were too heavy to carry around easily, especially for large transactions. To solve this problem, coins could be left with a trusted person, with the merchant being given a slip of paper (the receipt) recording how much money they had deposited with that person. When they returned with the paper to that person, their coins would be returned. True paper money, called "
jiaozi ''Jiaozi'' (; ; pinyin: jiǎozi) are Chinese dumplings commonly eaten in China and other parts of East Asia. ''Jiaozi'' are folded to resemble Chinese sycee and have great cultural significance attached to them within China. ''Jiaozi'' are ...
", developed from these promissory notes by the 11th century, during the
Song dynasty The Song dynasty (; ; 960–1279) was an imperial dynasty of China that began in 960 and lasted until 1279. The dynasty was founded by Emperor Taizu of Song following his usurpation of the throne of the Later Zhou. The Song conquered the rest ...
. By 960, the Song government was short of copper for striking coins, and issued the first generally circulating notes. These notes were a promise by the ruler to redeem them later for some other object of value, usually
specie Specie may refer to: * Coins or other metal money in mass circulation * Bullion coins * Hard money (policy) * Commodity money Commodity money is money whose value comes from a commodity of which it is made. Commodity money consists of objects ...
. The issue of credit notes was often for a limited duration, and at some discount to the promised amount later. The ''jiaozi'' did not replace coins but was used alongside them. The central government soon observed the economic advantages of printing paper money, issuing a monopoly for the issue of these certificates of deposit to several deposit shops. By the early 12th century, the amount of banknotes issued in a single year amounted to an annual rate of 26 million strings of cash coins. By the 1120s the central government started to produce its own state-issued paper money (using
woodblock printing Woodblock printing or block printing is a technique for printing text, images or patterns used widely throughout East Asia and originating in China in antiquity as a method of printing on textiles and later paper. Each page or image is create ...
). Even before this point, the Song government was amassing large amounts of paper
tribute A tribute (; from Latin ''tributum'', "contribution") is wealth, often in kind, that a party gives to another as a sign of submission, allegiance or respect. Various ancient states exacted tribute from the rulers of land which the state conqu ...
. It was recorded that each year before 1101, the prefecture of Xin'an (modern Shexian,
Anhui Anhui , (; formerly romanized as Anhwei) is a landlocked province of the People's Republic of China, part of the East China region. Its provincial capital and largest city is Hefei. The province is located across the basins of the Yangtze River ...
) alone would send 1,500,000 sheets of paper in seven different varieties to the capital at Kaifeng. In 1101, the Emperor Huizong of Song decided to lessen the amount of paper taken in the tribute quota, because it was causing detrimental effects and creating heavy burdens on the people of the region. However, the government still needed masses of paper product for the exchange certificates and the state's new issuing of paper money. For the printing of paper money alone, the Song government established several government-run factories in the cities of
Huizhou Huizhou ( zh, c= ) is a city in central-east Guangdong Province, China, forty-three miles north of Hong Kong. Huizhou borders the provincial capital of Guangzhou to the west, Shenzhen and Dongguan to the southwest, Shaoguan to the north, Heyu ...
,
Chengdu Chengdu (, ; Simplified Chinese characters, simplified Chinese: 成都; pinyin: ''Chéngdū''; Sichuanese dialects, Sichuanese pronunciation: , Standard Chinese pronunciation: ), Chinese postal romanization, alternatively Romanization of Chi ...
,
Hangzhou Hangzhou ( or , ; , , Standard Mandarin pronunciation: ), also romanized as Hangchow, is the capital and most populous city of Zhejiang, China. It is located in the northwestern part of the province, sitting at the head of Hangzhou Bay, whi ...
, and Anqi. The workforce employed in these paper money factories was quite large; it was recorded in 1175 that the factory at Hangzhou alone employed more than a thousand workers a day. However, the government issues of paper money were not yet nationwide standards of currency at that point; issues of banknotes were limited to regional areas of the empire, and were valid for use only in a designated and temporary limit of three years. The geographic limitation changed between 1265 and 1274, when the late southern Song government issued a nationwide paper currency standard, which was backed by gold or silver. The range of varying values for these banknotes was perhaps from one string of cash to one hundred at the most. Ever after 1107, the government printed money in no less than six ink colors and printed notes with intricate designs and sometimes even with mixture of a unique fiber in the paper to combat counterfeiting. The founder of the
Yuan dynasty The Yuan dynasty (), officially the Great Yuan (; xng, , , literally "Great Yuan State"), was a Mongol-led imperial dynasty of China and a successor state to the Mongol Empire after its division. It was established by Kublai, the fifth ...
,
Kublai Khan Kublai ; Mongolian script: ; (23 September 1215 – 18 February 1294), also known by his temple name as the Emperor Shizu of Yuan and his regnal name Setsen Khan, was the founder of the Yuan dynasty of China and the fifth khagan-emperor of th ...
, issued paper money known as
Jiaochao Jiaochao () is a Chinese word for banknote first used for the currency of the Jurchen-led Jin dynasty and later by the Mongol-led Yuan dynasty of China. Jin dynasty The Jurchens swept control over northern China, conquering the Liao dynasty a ...
. The original notes were restricted by area and duration, as in the Song dynasty, but in the later years, facing massive shortages of specie to fund their rule, the paper money began to be issued without restrictions on duration. Venetian merchants were impressed by the fact that the Chinese paper money was guaranteed by the State.


European explorers and merchants

According to a travelogue of a visit to Prague in 960 by
Ibrahim ibn Yaqub Ibrahim ibn Yaqub ( ar, إبراهيم بن يعقوب ''Ibrâhîm ibn Ya'qûb al-Ṭarṭûshi'' or ''al-Ṭurṭûshî''; he, אברהם בן יעקב, ''Avraham ben Yaʿakov''; 961–62) was a tenth-century Hispano-Arabic, Sephardi Jewish t ...
, small pieces of cloth were used as a means of trade, with these cloths having a set exchange rate versus silver. Around 1150, the
Knights Templar , colors = White mantle with a red cross , colors_label = Attire , march = , mascot = Two knights riding a single horse , equipment ...
would issue notes to pilgrims. Pilgrims would deposit valuables with a local Templar preceptory before embarking for the Holy Land and receive a document indicating the value of their deposit. They would then use that document upon arrival in the Holy Land to receive funds from the treasury of equal value. In the 13th century, Chinese paper money of Mongol Yuan became known in
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
through the accounts of travelers, such as
Marco Polo Marco Polo (, , ; 8 January 1324) was a Venetian merchant, explorer and writer who travelled through Asia along the Silk Road between 1271 and 1295. His travels are recorded in ''The Travels of Marco Polo'' (also known as ''Book of the Marv ...
and
William of Rubruck William of Rubruck ( nl, Willem van Rubroeck, la, Gulielmus de Rubruquis; ) was a Flemish Franciscan missionary and explorer. He is best known for his travels to various parts of the Middle East and Central Asia in the 13th century, including the ...
. Marco Polo's account of paper money during the
Yuan dynasty The Yuan dynasty (), officially the Great Yuan (; xng, , , literally "Great Yuan State"), was a Mongol-led imperial dynasty of China and a successor state to the Mongol Empire after its division. It was established by Kublai, the fifth ...
is the subject of a chapter of his book, ''
The Travels of Marco Polo ''Book of the Marvels of the World'' ( Italian: , lit. 'The Million', deriving from Polo's nickname "Emilione"), in English commonly called ''The Travels of Marco Polo'', is a 13th-century travelogue written down by Rustichello da Pisa from st ...
'', titled " How the Great Kaan Causeth the Bark of Trees, Made into Something Like Paper, to Pass for Money All Over his Country". In
medieval In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the Post-classical, post-classical period of World history (field), global history. It began with t ...
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical re ...
and
Flanders Flanders (, ; Dutch: ''Vlaanderen'' ) is the Flemish-speaking northern portion of Belgium and one of the communities, regions and language areas of Belgium. However, there are several overlapping definitions, including ones related to culture, ...
, because of the insecurity and impracticality of transporting large sums of cash over long distances, money traders started using promissory notes. In the beginning these were personally registered, but they soon became a written order to pay the amount to whoever had it in their possession. These notes are seen as a predecessor to regular banknotes by some but are mainly thought of as proto bills of exchange and cheques.De Geschiedenis van het Geld (the History of Money), 1992, Teleac, page 96 The term "bank note" comes from the notes of the bank ("nota di banco") and dates from the 14th century; it originally recognized the right of the holder of the note to collect the precious metal (usually gold or silver) deposited with a banker (via a currency account). In the 14th century, it was used in every part of Europe and in Italian city-state merchants colonies outside of
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
. For international payments, the more efficient and sophisticated
bill of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
("lettera di cambio"), that is, a promissory note based on a virtual currency account (usually a coin no longer physically existing), was used more often. All physical currencies were physically related to this virtual currency; this instrument also served as credit.


Birth of European banknotes

The shift toward the use of these receipts as a means of payment took place in the mid-17th century, as the
price revolution The Price Revolution, sometimes known as the Spanish Price Revolution, was a series of economic events that occurred between the second half of the 15th century and the first half of the 17th century, and most specifically linked to the high rate o ...
, when relatively rapid gold inflation was causing a re-assessment of how money worked. The
goldsmith banker A goldsmith banker was a business role that emerged in seventeenth century London from the London goldsmiths where they gradually expanded their services to include storage of wealth, providing loans, transferring money and providing bills of exch ...
s of
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
began to give out the receipts as payable to the ''bearer'' of the document rather than the original depositor. This meant that the note could be used as currency based on the security of the goldsmith, not the account holder of the goldsmith-banker. The bankers also began issuing a greater value of notes than the total value of their physical reserves in the form of loans, on the assumption that they would not have to redeem all of their issued banknotes at the same time. This was a natural extension of debt-based issuance of split tally sticks used for centuries in places like St. Giles Fair, however done in this way it was able to directly expand the expansion of the supply of ciculating money. As these receipts were increasingly used in the money circulation system, depositors began to ask for multiple receipts to be made out in smaller, fixed denominations for use as money. The receipts soon became a written order to pay the amount to whoever had possession of the note. These notes are credited as the first modern banknotes. The first short-lived attempt at issuing banknotes by a central bank was in 1661 by
Stockholms Banco Stockholms Banco (also known as the Palmstruch's Bank, sv, Palmstruchska banken) was the first European bank to print banknotes. It was founded in 1657 by Johan Palmstruch in Stockholm, began printing banknotes in 1661, but ran into financial d ...
, a predecessor of Sweden's central bank
Sveriges Riksbank Sveriges Riksbank, or simply the ''Riksbank'', is the central bank of Sweden. It is the world's oldest central bank and the fourth oldest bank in operation. Etymology The first part of the word ''riksbank'', ''riks'', stems from the Swedish w ...
. These replaced the copper-plates being used instead as a means of payment. This banknote issue was brought about by the peculiar circumstances of the Swedish coin supply. Cheap foreign imports of
copper Copper is a chemical element with the symbol Cu (from la, cuprum) and atomic number 29. It is a soft, malleable, and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a pinkis ...
had forced
the Crown The Crown is the state in all its aspects within the jurisprudence of the Commonwealth realms and their subdivisions (such as the Crown Dependencies, overseas territories, provinces, or states). Legally ill-defined, the term has different ...
to steadily increase the size of the copper coinage to maintain its value relative to
silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
. The heavy weight of the new coins encouraged merchants to deposit it in exchange for receipts. These became banknotes when the manager of the Bank decoupled the rate of note issue from the bank currency reserves. Three years later, the bank went bankrupt, after rapidly increasing the artificial money supply through the large-scale printing of paper money. A new bank, the '' Riksens Ständers Bank'' was established in 1668, but did not issue banknotes until the 19th century.


Permanent issue of banknotes

The modern banknote rests on the assumption that money is determined by a social and legal consensus. A gold coin's value is simply a reflection of the supply and demand mechanism of a society exchanging goods in a free market, as opposed to stemming from any intrinsic property of the metal. By the late 17th century, this new conceptual outlook helped to stimulate the issue of banknotes. The economist
Nicholas Barbon Nicholas Barbon ( 1640 – 1698) was an English economist, physician, and financial speculator. Historians of mercantilism consider him to be one of the first proponents of the free market. In the aftermath of the Great Fire of London, he be ...
wrote that money "was an imaginary value made by a law for the convenience of exchange". A temporary experiment of banknote issue was carried out by Sir
William Phips Sir William Phips (or Phipps; February 2, 1651 – February 18, 1695) was born in Maine in the Massachusetts Bay Colony and was of humble origin, uneducated, and fatherless from a young age but rapidly advanced from shepherd boy, to shipwright, s ...
as the Governor of the
Province of Massachusetts Bay The Province of Massachusetts Bay was a colony in British America which became one of the Thirteen Colonies, thirteen original states of the United States. It was chartered on October 7, 1691, by William III of England, William III and Mary II ...
in 1690 to help fund the war effort against France. The other
Thirteen Colonies The Thirteen Colonies, also known as the Thirteen British Colonies, the Thirteen American Colonies, or later as the United Colonies, were a group of Kingdom of Great Britain, British Colony, colonies on the Atlantic coast of North America. Fo ...
followed in Massachusetts' wake and began issuing
bills of credit Bills of credit are documents similar to banknotes issued by a government that represent a government's indebtedness to the holder. They are typically designed to circulate as currency or currency substitutes. Bills of credit are mentioned in Art ...
, an early form of paper currency distinct from banknotes, to fund military expenditures and for use as a common
medium of exchange In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. The origin of "mediums of exchange" in human societies is ass ...
. By the 1760s, these bills of credit were used in the majority of transactions in the Thirteen Colonies. The first bank to initiate the permanent issue of banknotes was the
Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...
. Established in 1694 to raise money for the funding of the
war War is an intense armed conflict between states, governments, societies, or paramilitary groups such as mercenaries, insurgents, and militias. It is generally characterized by extreme violence, destruction, and mortality, using regular o ...
against
France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
, the bank began issuing notes in 1695 with the promise to pay the bearer the value of the note on demand. They were initially handwritten to a precise amount and issued on deposit or as a loan. There was a gradual move toward the issuance of fixed denomination notes, and by 1745, standardized printed notes ranging from £20 to £1,000 were being printed. Fully printed notes that did not require the name of the payee and the cashier's
signature A signature (; from la, signare, "to sign") is a handwritten (and often stylized) depiction of someone's name, nickname, or even a simple "X" or other mark that a person writes on documents as a proof of identity and intent. The writer of a ...
first appeared in 1855. The Scottish economist
John Law John Law may refer to: Arts and entertainment * John Law (artist) (born 1958), American artist * John Law (comics), comic-book character created by Will Eisner * John Law (film director), Hong Kong film director * John Law (musician) (born 1961) ...
helped establish banknotes as a formal currency in France, after the wars waged by
Louis XIV , house = Bourbon , father = Louis XIII , mother = Anne of Austria , birth_date = , birth_place = Château de Saint-Germain-en-Laye, Saint-Germain-en-Laye, France , death_date = , death_place = Palace of Vers ...
left the country with a shortage of precious metals for coinage. In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
there were early attempts at establishing a central bank in 1791 and
1816 This year was known as the ''Year Without a Summer'', because of low temperatures in the Northern Hemisphere, possibly the result of the Mount Tambora volcanic eruption in Indonesia in 1815, causing severe global cooling, catastrophic in s ...
, but it was only in 1862 that the
federal government of the United States The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States, a federal republic located primarily in North America, composed of 50 states, a city within a fede ...
began to print banknotes.


Central bank issuance of legal tender

Originally, the banknote was simply a promise to the bearer that they could redeem it for its value in specie, but in 1833 the second in a series of
Bank Charter Act The Bank Charter Act 1844 (7 & 8 Vict. c. 32), sometimes referred to as the Peel Banking Act of 1844, was an Act of the Parliament of the United Kingdom, passed under the government of Robert Peel, which restricted the powers of British banks ...
s established that banknotes would be considered as
legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in ...
during peacetime. Until the mid-nineteenth century, commercial banks were able to issue their own banknotes, and notes issued by provincial
bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
ing companies were the common form of currency throughout England, outside London. The
Bank Charter Act of 1844 The Bank Charter Act 1844 (7 & 8 Vict. c. 32), sometimes referred to as the Peel Banking Act of 1844, was an Act of the Parliament of the United Kingdom, passed under the government of Robert Peel, which restricted the powers of British banks ...
, which established the modern central bank, restricted authorisation to issue new banknotes to the
Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...
, which would henceforth have sole control of the
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
in 1921. At the same time, the Bank of England was restricted to issue new banknotes only if they were 100% backed by gold or up to £14 million in government debt. The Act gave the Bank of England an effective monopoly over the note issue from 1928.


Issue of banknotes

Today, a
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
or treasury is generally solely responsible within a state or
currency union A currency union (also known as monetary union) is an intergovernmental agreement that involves two or more State (polity), states sharing the same currency. These states may not necessarily have any Economic integration#Stages, further integratio ...
for the issue of banknotes. However, this is not always the case, and historically the paper currency of countries was often handled entirely by private banks. Thus, many different banks or institutions may have issued banknotes in a given country. Commercial banks in the United States had legally issued banknotes before there was a national currency; however, these became subject to government authorization from 1863 to 1932. In the last of these series, the issuing bank would stamp its name and promise to pay, along with the signatures of its president and cashier on a preprinted note. By this time, the notes were standardized in appearance and not too different from
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
s. In a small number of countries, private banknote issue continues to this day. For example, by virtue of the complex constitutional setup in the United Kingdom, certain
commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...
s in two of the state's four constituent countries (
Scotland Scotland (, ) is a country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a border with England to the southeast and is otherwise surrounded by the Atlantic Ocean to the ...
and
Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...
) continue to print their own banknotes for domestic circulation, even though they are not
fiat money Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
or declared in law as
legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in ...
anywhere. The UK's central bank, the
Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...
, prints notes which are legal tender in
England and Wales England and Wales () is one of the three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. The substantive law of the jurisdiction is Eng ...
; these notes are also usable as money (but not legal tender) in the rest of the UK (see
Banknotes of the pound sterling Sterling banknotes are the banknotes in circulation in the United Kingdom and its related territories, denominated in pounds sterling (symbol: £; ISO 4217 currency code: GBP; traditional abbreviation: Stg.). Sterling banknotes are official ...
). In the two
Special Administrative Regions of the People's Republic of China The special administrative regions (SAR) of the People's Republic of China are one of the provincial-level administrative divisions of the People's Republic of China directly under the control of its Central People's Government (State Co ...
, arrangements are similar to those in the UK; in
Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
, three commercial banks are licensed to issue Hong Kong dollar notes, and in
Macau Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a pop ...
, banknotes of the
Macanese pataca The Macanese pataca or Macau pataca (; pt, pataca de Macau; sign: $; abbreviation: P; ISO code: MOP) is the currency of the Macau Special Administrative Region of the People's Republic of China. It is subdivided into 100 ''avos'' (; ''sin'' ...
are issued by two different commercial banks. In
Luxembourg Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small lan ...
, the
Banque Internationale à Luxembourg Banque Internationale à Luxembourg S.A. (BIL, "International Bank in Luxembourg") is the oldest private bank in Luxembourg. It offers commercial and corporate banking services. Since 2018, it has been majority-owned by China-headquartered Legend ...
was entitled to issue its own
Luxembourgish franc The Luxembourg franc (''F'' or ISO ''LUF'', lb, Frang), subdivided into 100 centimes, was the currency of Luxembourg between 1854 and 2002, except in 1941–44. In 1944–2002, its value was equal to that of the Belgian franc. The franc remaine ...
notes until the introduction of the
Euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
in 1999. As well as commercial issuers, other organizations may have note-issuing powers; for example, until 2002 the
Singapore dollar The Singapore dollar (sign: S$; code: SGD) is the official currency of the Republic of Singapore. It is divided into 100 cents. It is normally abbreviated with the dollar sign $, or S$ to distinguish it from other dollar-denominated currencie ...
was issued by the
Board of Commissioners of Currency Singapore The Monetary Authority of Singapore (MAS) is the central bank and financial regulatory authority of Singapore. It administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well ...
, a government agency which was later taken over by the
Monetary Authority of Singapore The Monetary Authority of Singapore (MAS) is the central bank and financial regulatory authority of Singapore. It administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well ...
. As with any printing, there is also a chance for banknotes to have printing errors. For U.S. banknotes, these errors can include board break errors, butterfly fold errors, cutting errors, dual denomination errors, fold over errors, and misalignment errors.


Advantages and disadvantages

Prior to the introduction of banknotes, precious or semiprecious metals minted into
coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s to certify their substance were widely used as a medium of exchange. The value that people attributed to coins was originally based upon the value of the metal unless they were token issues or had been debased. Banknotes were originally a claim for the coins held by the bank, but due to the ease with which they could be transferred and the confidence that people had in the capacity of the bank to settle the notes in coin if presented, they became a popular means of exchange in their own right. They now make up a very small proportion of the "money" that people think that they have as demand deposit bank accounts and electronic payments have negated the need to carry notes and coins. Banknotes have a natural advantage over coins in that they are lighter to carry, but they are also less durable than coins. Banknotes issued by
commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...
s had
counterparty risk A credit risk is risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased ...
, meaning that the bank may not be able to make payment when the note was presented. Notes issued by central banks had a theoretical risk when they were backed by gold and silver. Both banknotes and coins are subject to
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
. The durability of
coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s means that even if metal coins melt in a fire or are submerged under the sea for hundreds of years they still have some value when they are recovered. Gold
coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s salvaged from shipwrecks retain almost all of their original appearance, but silver
coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s slowly corrode. Other costs of using bearer money include: # Discounting to face value: Before national currencies and efficient clearing houses, banknotes were only redeemable at face value at the issuing bank. Even a branch bank could discount notes of other branches of the same bank. The discounts usually increased with distance from the issuing bank. The discount also depended on the perceived safety of the bank. When banks failed, the notes were usually partly redeemed out of reserves, but sometimes became worthless. The problem of discounting within a country does not exist with national currencies. # Counterfeiting paper notes has always been a problem, especially since the introduction of color photocopiers and computer
image scanner An image scanner—often abbreviated to just scanner—is a device that optically scans images, printed text, handwriting or an object and converts it to a digital image. Commonly used in offices are variations of the desktop ''flatbed scanner'' ...
s. Numerous banks and nations have incorporated many types of countermeasures in order to keep the money secure. However, extremely sophisticated counterfeit notes known as
superdollar A superdollar (also known as a superbill or supernote) is a very high quality counterfeit United States one hundred-dollar bill, alleged by the U.S. government to have been made by unknown organizations or governments. In 2011, government sources ...
s have been detected in recent years. # Manufacturing or issue costs. Coins are produced by industrial manufacturing methods that process the precious or semi-precious metals, and require additions of alloy for hardness and wear resistance. By contrast, bank notes are printed paper (or polymer), and typically have a higher cost of issue, especially in larger denominations, compared with coins of the same value. # Wear costs. Banknotes don't lose
economic value In economics, economic value is a measure of the benefit provided by a good or service to an economic agent. It is generally measured through units of currency, and the interpretation is therefore "what is the maximum amount of money a speci ...
by wear, since, even if they are in poor condition, they are still a legally valid claim on the issuing bank. However, banks of issue do have to pay the cost of replacing banknotes in poor condition, and paper notes wear out much faster than coins. # Cost of transport. Coins can be expensive to transport for high value transactions, but banknotes can be issued in large denominations that are lighter than the equivalent value in coins. # Cost of acceptance. Coins can be checked for authenticity by weighing and other forms of examination and testing. These costs can be significant, but good quality coin design and manufacturing can help reduce these costs. Banknotes also have an acceptance cost – the expense of checking the banknote's security features and confirming acceptability of the issuing bank. The different advantages and disadvantages of coins and banknotes imply that there may be an ongoing role for both forms of bearer money, each being used where its advantages outweigh its disadvantages.


Materials used for banknotes


Paper banknotes

Most banknotes are made from cotton paper with a weight of 80 to 90 grams per square meter. The cotton is sometimes mixed with
linen Linen () is a textile made from the fibers of the flax plant. Linen is very strong, absorbent, and dries faster than cotton. Because of these properties, linen is comfortable to wear in hot weather and is valued for use in garments. It also ...
, abaca, or other textile fibres. Generally, the paper used is different from ordinary paper: it is much more resilient, resists wear and tear (the average life of a banknote is two years), and also does not contain the usual agents that make ordinary paper glow slightly under
ultraviolet Ultraviolet (UV) is a form of electromagnetic radiation with wavelength from 10 nanometer, nm (with a corresponding frequency around 30 Hertz, PHz) to 400 nm (750 Hertz, THz), shorter than that of visible light, but longer than ...
light. Unlike most printing and writing paper, banknote paper is infused with polyvinyl alcohol or gelatin, instead of water, to give it extra strength. Early Chinese banknotes were printed on paper made of
mulberry ''Morus'', a genus of flowering plants in the family Moraceae, consists of diverse species of deciduous trees commonly known as mulberries, growing wild and under cultivation in many temperate world regions. Generally, the genus has 64 identif ...
bark. Mitsumata (''
Edgeworthia chrysantha ''Edgeworthia chrysantha'' (common names: Oriental paperbush, mitsumata) is a plant in the family Thymelaeaceae. Etymology The genus was named in honour of Michael Pakenham Edgeworth (1812–1881), an Irish-born Victorian era amateur botanist, ...
'') and other fibers are used in Japanese banknote paper (a kind of
Washi is traditional Japanese paper. The term is used to describe paper that uses local fiber, processed by hand and made in the traditional manner. ''Washi'' is made using fibers from the inner bark of the gampi tree, the mitsumata shrub (''E ...
). Most banknotes are made using the mould made process in which a
watermark A watermark is an identifying image or pattern in paper that appears as various shades of lightness/darkness when viewed by transmitted light (or when viewed by reflected light, atop a dark background), caused by thickness or density variations ...
and thread is incorporated during the paper forming process. The thread is a simple looking security component found in most banknotes. It is however often rather complex in construction comprising fluorescent, magnetic, metallic and micro print elements. By combining it with watermarking technology the thread can be made to surface periodically on one side only. This is known as windowed thread and further increases the counterfeit resistance of the banknote paper. This process was invented by Portals, part of the
De La Rue De La Rue plc (, ) is a British company headquartered in Basingstoke, England, that designs and produces banknotes, secure polymer substrate and banknote security features (including security holograms, security threads and security printe ...
group in the UK. Other related methods include watermarking to reduce the number of corner folds by strengthening this part of the note. Varnishing and coatings reduce the accumulation of dirt on the note for longer durability in circulation. Another security feature is based on windows in the paper which are covered by holographic foils to make it very hard to copy. Such technology is applied as a ''portrait window'' for the higher denominations of the Europa series (ES2) of the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
banknotes. Windows are also used with the Hybrid substrate from
Giesecke+Devrient Giesecke may refer to: People: * Heinz-Eberhard Giesecke (1913–1991), German historian *Karl Ludwig Giesecke FRSE (1761–1833), German actor, librettist, polar explorer and mineralogist * Markus Giesecke (born 1979), German futsal player from Re ...
which is composed of an inner layer of paper substrate with thin outer layers of plastic film for high durability.


History of counterfeiting and security measures

When paper bank notes were first introduced in England, they resulted in a dramatic rise in counterfeiting. The attempts by the Bank of England and the Royal Mint to stamp out currency crime led to new policing strategies, including the increased use of entrapment. The characteristics of banknotes, their materials and production techniques (as well as their development over history) are topics that normally aren't thoroughly examined by historians, even though now there are a number of works detailing how bank notes were actually constructed. This is mostly due to the fact that historians prioritize the theoretical understanding of how money worked rather than how it was produced. The first great deterrent against counterfeiting was the death penalty for forgers, but this wasn't enough to stop the rise of counterfeiting. Over the eighteenth century, far fewer banknotes were circulating in England compared to the boom of bank notes in the nineteenth century; because of this, improving note-making techniques wasn't considered a compelling issue. In the eighteenth century, banknotes were produced mainly through copper-plate engraving and
printing Printing is a process for mass reproducing text and images using a master form or template. The earliest non-paper products involving printing include cylinder seals and objects such as the Cyrus Cylinder and the Cylinders of Nabonidus. The ea ...
and they were single-sided. Notes making technologies remained basically the same during the eighteenth century The first banknotes were produced through the so-called ''
intaglio printing Intaglio ( ; ) is the family of printing and printmaking techniques in which the image is incised into a surface and the incised line or sunken area holds the ink. It is the direct opposite of a relief print where the parts of the matrix that ...
'', a technique that consisted of engraving a copper plate by hand and then covering it in ink to print the bank notes. Only with this technique it was possible, at that time, to force the paper into the lines of the engraving and to make suitable banknotes. Another factor that made it harder to counterfeit banknotes was the paper, since the type of paper used for banknotes was rather different from the paper commercially available at that time. Despite this, some forgers managed to successfully forge notes by getting involved with and consulting paper makers, in order to make a similar kind of paper by themselves. Mockford, 2014; pp. 122-123 Furthermore, watermarked paper was also used since banknotes first appeared; it involved the sewing of a thin wire frame into paper mould. Watermarks for notes were first used in 1697 by a Berkshire paper maker whose name was Rice Watkins. Watermarks, together with a special paper type, were supposed to make it harder and more expensive to forge banknotes, since more complex and expensive paper making machines were needed in order to make them. At the beginning of the nineteenth century (the so-called
Bank Restriction Period The Bank Restriction Act 1797 was an Act of the Parliament of Great Britain (37 Geo. III. c. 45) which removed the requirement for the Bank of England to convert banknotes into gold. The period lasted until 1821, when convertibility was restored ...
, 1797-1821), the dramatically increased demand of bank notes slowly forced the banks to refine the technologies employed. In 1801,
watermarks A watermark is an identifying image or pattern in paper that appears as various shades of lightness/darkness when viewed by transmitted light (or when viewed by reflected light, atop a dark background), caused by thickness or density variations ...
, which previously were straight lines, became wavy, thanks to the idea of a watermark mould maker whose name was William Brewer. This made even harder the counterfeiting of bank notes, at least in the short term, since in 1803 the number of forged bank notes fell to just 3000, compared to 5000 of the previous year In the same period, bank notes also started to become double-sided and with more complex patterns, and banks asked skilled engravers and artists to help them make their notes harder to counterfeit (episode labelled by historians as "the search for the inimitable banknote"). The ease with which paper money can be created, by both legitimate authorities and counterfeiters, has led both to a temptation in times of crisis such as war or revolution to produce paper money which was not supported by precious metal or other goods, thus leading to
Hyperinflation In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
and a loss of faith in the value of paper money, e.g. the Continental Currency produced by the
Continental Congress The Continental Congress was a series of legislative bodies, with some executive function, for thirteen of Britain's colonies in North America, and the newly declared United States just before, during, and after the American Revolutionary War. ...
during the
American Revolution The American Revolution was an ideological and political revolution that occurred in British America between 1765 and 1791. The Americans in the Thirteen Colonies formed independent states that defeated the British in the American Revolut ...
, the
Assignat An assignat () was a monetary instrument, an order to pay, used during the time of the French Revolution, and the French Revolutionary Wars. France Assignats were paper money (fiat currency) issued by the Constituent Assembly in France from 1 ...
s produced during the
French Revolution The French Revolution ( ) was a period of radical political and societal change in France that began with the Estates General of 1789 and ended with the formation of the French Consulate in November 1799. Many of its ideas are considere ...
, the paper currency produced by the
Confederate States of America The Confederate States of America (CSA), commonly referred to as the Confederate States or the Confederacy was an unrecognized breakaway republic in the Southern United States that existed from February 8, 1861, to May 9, 1865. The Confeder ...
and the individual states of the Confederate States of America, the financing of World War I by the
Central Powers The Central Powers, also known as the Central Empires,german: Mittelmächte; hu, Központi hatalmak; tr, İttifak Devletleri / ; bg, Централни сили, translit=Tsentralni sili was one of the two main coalitions that fought in ...
(by 1922 1 gold
Austro-Hungarian krone The crown (german: Krone, hu, korona, it, Corona, pl, korona, sl, krona, sh, kruna, cz, koruna, sk, koruna, ro, coroană) was the official currency of Austria-Hungary from 1892 (when it replaced the florin as part of the adoption of the ...
of 1914 was worth 14,400 paper Kronen), the devaluation of the
Yugoslav Dinar The dinar (Cyrillic script: динар) was the currency of the three Yugoslav states: the Kingdom of Yugoslavia (formerly the Kingdom of Serbs, Croats and Slovenes), the Socialist Federal Republic of Yugoslavia, and the Federal Republic of Yu ...
in the 1990s, etc. Banknotes may also be
overprinted An overprint is an additional layer of text or graphics added to the face of a postage or revenue stamp, postal stationery, banknote or ticket after it has been printed. Post offices most often use overprints for internal administrative purpos ...
to reflect political changes that occur faster than new currency can be printed. In 1988,
Austria Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...
produced the 5000
Schilling Schilling may refer to: * Schilling (unit), an historical unit of measurement * Schilling (coin), the historical European coin * Austrian schilling, the former currency of Austria * A. Schilling & Company, an historical West Coast spice firm acquir ...
banknote (
Mozart Wolfgang Amadeus Mozart (27 January 17565 December 1791), baptised as Joannes Chrysostomus Wolfgangus Theophilus Mozart, was a prolific and influential composer of the Classical period (music), Classical period. Despite his short life, his ra ...
), which is the first foil application ( Kinegram) to a paper banknote in the history of banknote printing. The application of optical features is now in common use throughout the world. Many countries' banknotes now have embedded
holograms Holography is a technique that enables a wavefront to be recorded and later re-constructed. Holography is best known as a method of generating real three-dimensional images, but it also has a wide range of other applications. In principle, it ...
.


Polymer banknotes

In 1983,
Costa Rica Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
and
Haiti Haiti (; ht, Ayiti ; French: ), officially the Republic of Haiti (); ) and formerly known as Hayti, is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean Sea, east of Cuba and Jamaica, and ...
issued the first
Tyvek Tyvek () is a brand of synthetic flashspun high-density polyethylene fibers. The name "Tyvek" is a registered trademark of the American multinational chemical company DuPont, which discovered and commercialized Tyvek in the late 1950s and early ...
and the
Isle of Man ) , anthem = "O Land of Our Birth" , image = Isle of Man by Sentinel-2.jpg , image_map = Europe-Isle_of_Man.svg , mapsize = , map_alt = Location of the Isle of Man in Europe , map_caption = Location of the Isle of Man (green) in Europe ...
issued the first
Bradvek Bradvek was a form of Tyvek polymer, produced by DuPont. It was used for printing one of the first polymer banknotes in 1983 for the Isle of Man by the American Banknote Company. See also *Bradbury Wilkinson and Company Bradbury Wilkinson & Co ...
polymer (or plastic) banknotes; these were printed by the
American Banknote Company ABCorp is an American corporation providing contract manufacturing and related services to the authentication, payment and secure access business sectors. Its history dates back to 1795 as a secure engraver and printer, and assisting the newl ...
and developed by
DuPont DuPont de Nemours, Inc., commonly shortened to DuPont, is an American multinational chemical company first formed in 1802 by French-American chemist and industrialist Éleuthère Irénée du Pont de Nemours. The company played a major role in ...
. These early plastic notes were plagued with issues such as ink wearing off and were discontinued. In 1988, after significant research and development in Australia by the
Commonwealth Scientific and Industrial Research Organisation The Commonwealth Scientific and Industrial Research Organisation (CSIRO) is an Australian Government agency responsible for scientific research. CSIRO works with leading organisations around the world. From its headquarters in Canberra, CSIRO ...
(CSIRO) and the
Reserve Bank of Australia The Reserve Bank of Australia (RBA) is Australia's central bank and banknote issuing authority. It has had this role since 14 January 1960, when the ''Reserve Bank Act 1959'' removed the central banking functions from the Commonwealth Bank. Th ...
, Australia produced the first
polymer banknote Polymer banknotes are banknotes made from a synthetic polymer such as biaxially oriented polypropylene (BOPP). Such notes incorporate many security features not available in paper banknotes, including the use of metameric inks. Polymer banknote ...
made from
biaxially-oriented polypropylene Polypropylene (PP), also known as polypropene, is a thermoplastic polymer used in a wide variety of applications. It is produced via chain-growth polymerization from the monomer propylene. Polypropylene belongs to the group of polyolefins a ...
(plastic), and in 1996, it became the first country to have a full set of circulating polymer banknotes of all denominations completely replacing its paper banknotes. Since then, other countries to adopt circulating polymer banknotes include
Bangladesh Bangladesh (}, ), officially the People's Republic of Bangladesh, is a country in South Asia. It is the eighth-most populous country in the world, with a population exceeding 165 million people in an area of . Bangladesh is among the mos ...
, Brazil,
Brunei Brunei ( , ), formally Brunei Darussalam ( ms, Negara Brunei Darussalam, Jawi alphabet, Jawi: , ), is a country located on the north coast of the island of Borneo in Southeast Asia. Apart from its South China Sea coast, it is completely sur ...
, Canada,
Chile Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the east a ...
, Guatemala,
Dominican Republic The Dominican Republic ( ; es, República Dominicana, ) is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean region. It occupies the eastern five-eighths of the island, which it shares wit ...
, Indonesia,
Israel Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
, Malaysia,
Mexico Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
, Nepal, New Zealand, Papua New Guinea,
Paraguay Paraguay (; ), officially the Republic of Paraguay ( es, República del Paraguay, links=no; gn, Tavakuairetã Paraguái, links=si), is a landlocked country in South America. It is bordered by Argentina to the south and southwest, Brazil to th ...
,
Romania Romania ( ; ro, România ) is a country located at the crossroads of Central Europe, Central, Eastern Europe, Eastern, and Southeast Europe, Southeastern Europe. It borders Bulgaria to the south, Ukraine to the north, Hungary to the west, S ...
,
Samoa Samoa, officially the Independent State of Samoa; sm, Sāmoa, and until 1997 known as Western Samoa, is a Polynesian island country consisting of two main islands (Savai'i and Upolu); two smaller, inhabited islands (Manono Island, Manono an ...
, Singapore, the
Solomon Islands Solomon Islands is an island country consisting of six major islands and over 900 smaller islands in Oceania, to the east of Papua New Guinea and north-west of Vanuatu. It has a land area of , and a population of approx. 700,000. Its capita ...
,
Thailand Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is bo ...
,
Trinidad and Tobago Trinidad and Tobago (, ), officially the Republic of Trinidad and Tobago, is the southernmost island country in the Caribbean. Consisting of the main islands Trinidad and Tobago, and numerous much smaller islands, it is situated south of ...
, the United Kingdom, Uruguay, Vietnam, and
Zambia Zambia (), officially the Republic of Zambia, is a landlocked country at the crossroads of Central Africa, Central, Southern Africa, Southern and East Africa, although it is typically referred to as being in Southern Africa at its most cent ...
, with other countries issuing commemorative polymer notes, including China, Kuwait, the
Northern Bank Northern Bank Limited T/A Danske Bank is a retail bank in Northern Ireland. Northern Bank is one of the oldest banks in Ireland having been formed in 1809, and forms part of one of the Big Four banks in Ireland. Northern Bank took on the name ...
of
Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...
, Taiwan and Hong Kong. Another country indicating plans to issue polymer banknotes is
Nigeria Nigeria ( ), , ig, Naìjíríyà, yo, Nàìjíríà, pcm, Naijá , ff, Naajeeriya, kcg, Naijeriya officially the Federal Republic of Nigeria, is a country in West Africa. It is situated between the Sahel to the north and the Gulf o ...
. In 2005,
Bulgaria Bulgaria (; bg, България, Bǎlgariya), officially the Republic of Bulgaria,, ) is a country in Southeast Europe. It is situated on the eastern flank of the Balkans, and is bordered by Romania to the north, Serbia and North Macedon ...
issued the world's first
hybrid paper-polymer banknote A hybrid paper-polymer banknote or Composite Substrate is a banknote made from a mixture of paper and polymer substance. Hybrid banknotes are essentially a paper banknote with a polymer patch. A polymer patch/band is applied vertically over the en ...
. Polymer banknotes were developed to improve durability and prevent
counterfeit To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value tha ...
ing through incorporated security features, such as
optically variable devices An optical variable device or optically variable device (OVD) is an iridescent or non-iridescent security feature that exhibits different information, such as movement or colour changes, depending on the viewing and/or lighting conditions. The par ...
that are extremely difficult to reproduce.


Other materials

Over the years, a number of materials other than paper have been used to print banknotes. This includes various textiles, including silk, and materials such as leather. Silk and other fibers have been commonly used in the manufacture of various banknote papers, intended to provide both additional durability and security. Crane and Company patented banknote paper with embedded silk threads in 1844 and has supplied paper to the
United States Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...
since 1879. Banknotes printed on pure silk "paper" include "emergency money"
Notgeld ''Notgeld'' (German for "emergency money" or "necessity money") refers to money issued by an institution in a time of economic or political crisis. The issuing institution is usually one without official sanction from the central government. This ...
issues from a number of German towns in 1923 during a period of fiscal crisis and
hyperinflation In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
. Most notoriously,
Bielefeld Bielefeld () is a city in the Ostwestfalen-Lippe Region in the north-east of North Rhine-Westphalia, Germany. With a population of 341,755, it is also the most populous city in the administrative region (''Regierungsbezirk'') of Detmold and the ...
produced a number of silk, leather, velvet, linen and wood issues. These issues were produced primarily for collectors, rather than for circulation. They are in demand by collectors. Banknotes printed on cloth include a number of Communist Revolutionary issues in China from areas such as
Xinjiang Xinjiang, SASM/GNC: ''Xinjang''; zh, c=, p=Xīnjiāng; formerly romanized as Sinkiang (, ), officially the Xinjiang Uygur Autonomous Region (XUAR), is an autonomous region of the People's Republic of China (PRC), located in the northwest ...
, or Sinkiang, in the United Islamic Republic of East
Turkestan Turkestan, also spelled Turkistan ( fa, ترکستان, Torkestân, lit=Land of the Turks), is a historical region in Central Asia corresponding to the regions of Transoxiana and Xinjiang. Overview Known as Turan to the Persians, western Turke ...
in 1933. Emergency money was also printed in 1902 on
khaki The color khaki (, ) is a light shade of tan with a slight yellowish tinge. Khaki has been used by many armies around the world for uniforms and equipment, particularly in arid or desert regions, where it provides camouflage relative to sandy ...
shirt fabric during the
Boer War The Second Boer War ( af, Tweede Vryheidsoorlog, , 11 October 189931 May 1902), also known as the Boer War, the Anglo–Boer War, or the South African War, was a conflict fought between the British Empire and the two Boer Republics (the Sou ...
.
Cotton Cotton is a soft, fluffy staple fiber that grows in a boll, or protective case, around the seeds of the cotton plants of the genus ''Gossypium'' in the mallow family Malvaceae. The fiber is almost pure cellulose, and can contain minor perce ...
fibers together with 25% linen is the material of the banknotes in the United States. Leather banknotes (or coins) were issued in a number of
siege A siege is a military blockade of a city, or fortress, with the intent of conquering by attrition warfare, attrition, or a well-prepared assault. This derives from la, sedere, lit=to sit. Siege warfare is a form of constant, low-intensity con ...
s, as well as in other times of emergency. During the Russian administration of Alaska, banknotes were printed on
sealskin Sealskin is the skin of a seal. Seal skins have been used by aboriginal people for millennia to make waterproof jackets and boots, and seal fur to make fur coats. Sailors used to have tobacco pouches made from sealskin. Canada, Greenland, Norwa ...
. A number of 19th century issues are known in Germanic and Estonia, including the places of
Dorpat Tartu is the second largest city in Estonia after the Northern European country's political and financial capital, Tallinn. Tartu has a population of 91,407 (as of 2021). It is southeast of Tallinn and 245 kilometres (152 miles) northeast of ...
, Pernau,
Reval Tallinn () is the most populous and capital city of Estonia. Situated on a bay in north Estonia, on the shore of the Gulf of Finland of the Baltic Sea, Tallinn has a population of 437,811 (as of 2022) and administratively lies in the Harju ''m ...
, Werro and Woiseck. In addition to the Bielefeld issues, other German leather
Notgeld ''Notgeld'' (German for "emergency money" or "necessity money") refers to money issued by an institution in a time of economic or political crisis. The issuing institution is usually one without official sanction from the central government. This ...
from 1923 is known from Borna, Osterwieck, Paderborn and Pößneck. Other issues from 1923 were printed on wood, which was also used in Canada in 1763–1764 during
Pontiac's Rebellion Pontiac's War (also known as Pontiac's Conspiracy or Pontiac's Rebellion) was launched in 1763 by a loose confederation of Native Americans dissatisfied with British rule in the Great Lakes region following the French and Indian War (1754–176 ...
, and by the
Hudson's Bay Company The Hudson's Bay Company (HBC; french: Compagnie de la Baie d'Hudson) is a Canadian retail business group. A fur trading business for much of its existence, HBC now owns and operates retail stores in Canada. The company's namesake business div ...
. In 1848, in
Bohemia Bohemia ( ; cs, Čechy ; ; hsb, Čěska; szl, Czechy) is the westernmost and largest historical region of the Czech Republic. Bohemia can also refer to a wider area consisting of the historical Lands of the Bohemian Crown ruled by the Bohem ...
, wooden checkerboard pieces were used as money. Even
playing cards A playing card is a piece of specially prepared card stock, heavy paper, thin cardboard, plastic-coated paper, cotton-paper blend, or thin plastic that is marked with distinguishing motifs. Often the front (face) and back of each card has a f ...
were used for currency in France in the early 19th century, and in French Canada from 1685 until 1757, the Colony of Louisiana, Dutch Guiana, and in the
Isle of Man ) , anthem = "O Land of Our Birth" , image = Isle of Man by Sentinel-2.jpg , image_map = Europe-Isle_of_Man.svg , mapsize = , map_alt = Location of the Isle of Man in Europe , map_caption = Location of the Isle of Man (green) in Europe ...
in the beginning of the 19th century, and again in Germany after World War I. Most recently,
Bisphenol S Bisphenol S (BPS) is an organic compound with the formula (HOC6H4)2SO2. It has two phenol functional groups on either side of a sulfonyl group. It is commonly used in curing fast-drying epoxy resin adhesives. It is classified as a bisphenol, ...
(BPS), has been frequently used in the production of banknotes worldwide. BPS is an endocrine disruptor that is subject to human dermal absorption through handling banknotes.


Vertical orientation

Vertical currency is a type of
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...
in which the orientation has been changed from the conventional horizontal orientation to a vertical orientation. Dowling Duncan, a self-touted multidisciplinary design studio, conducted a study in which they determined people tend to handle and deal with money vertically rather than horizontally, especially when the currency is processed through ATM and other money machines. They also note how money transactions are conducted vertically not horizontally.
Bermuda ) , anthem = "God Save the King" , song_type = National song , song = " Hail to Bermuda" , image_map = , map_caption = , image_map2 = , mapsize2 = , map_caption2 = , subdivision_type = Sovereign state , subdivision_name = , e ...
,
Cape Verde , national_anthem = () , official_languages = Portuguese , national_languages = Cape Verdean Creole , capital = Praia , coordinates = , largest_city = capital , demonym ...
,
Organisation of Eastern Caribbean States The Organisation of Eastern Caribbean States (OECS; French: ''Organisation des États de la Caraïbe orientale'', OECO) is an inter-governmental organisation dedicated to economic harmonisation and integration, protection of human and legal ri ...
,
Switzerland ). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
, and
Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...
have adopted vertically oriented currency, though Cape Verde has now reverted to horizontal orientation. Since 1979,
Sri Lanka Sri Lanka (, ; si, ශ්‍රී ලංකා, Śrī Laṅkā, translit-std=ISO (); ta, இலங்கை, Ilaṅkai, translit-std=ISO ()), formerly known as Ceylon and officially the Democratic Socialist Republic of Sri Lanka, is an ...
has printed the reverse of its banknotes vertically. Between 1993 and 2013, Brazil has printed banknotes of 5000 and 50000 cruzeiros reais and the first
Brazilian real The Brazilian real (plural, pl. '; currency symbol, sign: R$; ISO 4217, code: BRL) is the official currency of Brazil. It is subdivided into 100 centavos. The Central Bank of Brazil is the central bank and the issuing authority. The real repl ...
series of banknotes has the obverse in traditional horizontal layout, while the reverse is in vertical format. The 2018 Hong Kong dollar banknotes series too has the obverse in traditional horizontal layout, while the reverse is in vertical format. Early Chinese banknotes were also vertical, due to the direction of Chinese writing. The 2018 Canadian $10 bill featuring a portrait of Canadian civil rights pioneer
Viola Desmond Viola Irene Desmond (July 6, 1914 – February 7, 1965) was a Canadian civil and women's rights activist and businesswoman of Black Nova Scotian descent. In 1946, she challenged racial segregation at a cinema in New Glasgow, Nova Scotia by refu ...
is presented in a vertical format. The Northern Irish £5 and £10 notes issued by
Ulster Bank Ulster Bank ( ga, Banc Uladh) is a large retail bank, and one of the traditional Big Four (banking)#Ireland, Big Four Irish clearing banks. The Ulster Bank Group is subdivided into two separate legal entities: NatWest, National Westminster Ban ...
for 2019 will also be presented in this way.


Vending machines and banknotes

In the late 20th century,
vending machines A vending machine is an automated machine that provides items such as snacks, beverages, cigarettes, and lottery tickets to consumers after cash, a credit card, or other forms of payment are inserted into the machine or otherwise made. The fir ...
were designed to recognize banknotes of the smaller values long after they were designed to recognize coins distinct from slugs. This capability has become inescapable in economies where inflation has not been followed by introduction of progressively larger coin denominations (such as the United States, where several attempts to make dollar coins popular in general circulation have largely failed). The existing infrastructure of such machines presents one of the difficulties in changing the design of these banknotes to make them less counterfeitable, that is, by adding additional features so easily discernible by people that they would immediately reject banknotes of inferior quality, for every machine in the country would have to be updated.


Destruction

A banknote is removed from circulation because of everyday
wear and tear Wear and tear is damage that naturally and inevitably occurs as a result of normal wear or aging. It is used in a legal context for such areas as warranty contracts from manufacturers, which usually stipulate that damage from ''wear and tear'' w ...
from its handling. Banknotes are passed through a banknote sorting machine for determining authenticity and fitness for circulation, or may be classified unfit for circulation if they are worn,
dirt Dirt is an unclean matter, especially when in contact with a person's clothes, skin, or possessions. In such cases, they are said to become dirty. Common types of dirt include: * Debris: scattered pieces of waste or remains * Dust: a genera ...
y,
soil Soil, also commonly referred to as earth or dirt, is a mixture of organic matter, minerals, gases, liquids, and organisms that together support life. Some scientific definitions distinguish ''dirt'' from ''soil'' by restricting the former te ...
ed, damaged, mutilated or torn. Unfit notes are returned to the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
for secure online destruction by high-speed banknote sorting machines using a cross-cut shredder device similar to a
paper shredder A paper shredder is a mechanical device used to cut sheets of paper into either strips or fine particles. Government organizations, businesses, and private individuals use shredders to destroy private, confidential, or otherwise sensitive docum ...
with security level P-5 (pieces smaller than 30 mm²) according to the standard DIN 66399–2. This small size decomposes a banknote into typically more than 500 tiny pieces and rules out reconstruction like a jigsaw puzzle because the shreds from many banknotes are commingled. A subsequent briquettor compresses shredded paper material into a small cylindrical or rectangular form for the disposal (e. g.
landfill A landfill site, also known as a tip, dump, rubbish dump, garbage dump, or dumping ground, is a site for the disposal of waste materials. Landfill is the oldest and most common form of waste disposal, although the systematic burial of the waste ...
or burning) Before the 1990s, unfit banknotes were destroyed by
incineration Incineration is a waste treatment process that involves the combustion of substances contained in waste materials. Industrial plants for waste incineration are commonly referred to as waste-to-energy facilities. Incineration and other high ...
with a higher risk of manipulations. When a Federal Reserve Bank of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
receives a cash deposit from a commercial bank or another
financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial inst ...
, it checks the individual notes to determine whether they are fit for future circulation. About one-third of the notes that the Fed receives are unfit, and the Fed destroys them. US dollar banknotes last an average of more than five years. Contaminated banknotes are also decommissioned and removed from circulation, primarily to prevent the spread of diseases. A Canadian government report indicates: In the US, the nickname "Fed Shreds" refers to paper money which has been shredded after becoming unfit for circulation. Although these shredded banknotes are generally landfilled, they are sometimes sold or given away in small bags as
souvenir A souvenir (), memento, keepsake, or token of remembrance is an object a person acquires for the memories the owner associates with it. A souvenir can be any object that can be collected or purchased and transported home by the traveler as a m ...
s or as briquettes.
Polymer banknote Polymer banknotes are banknotes made from a synthetic polymer such as biaxially oriented polypropylene (BOPP). Such notes incorporate many security features not available in paper banknotes, including the use of metameric inks. Polymer banknote ...
s may be shredded and then melted down and recycled to form plastic products like building components, plumbing fittings, or compost bins. File:Fed-Shreds of US dollar from FRB San Francisco.jpg, Fed Shreds as souvenir from the
Federal Reserve Bank of San Francisco The Federal Reserve Bank of San Francisco (informally referred to as the San Francisco Fed) is the federal bank for the twelfth district in the United States. The twelfth district is made up of nine western states—Alaska, Arizona, California, ...
File:Shreds US Dollar Details.jpg, Shreds of unfit
US dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
notes with a typical size of less than 1.5 mm x 16 mm File:Shredded US-Dollar Notes front view.jpg, Shredded and briquetted US dollar notes from the Federal Reserve Bank of New York (approx. 1000 pieces, 1 kg) File:Shredded US Dollar Notes rear view.jpg, Shredded and briquetted
US dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
notes from the Federal Reserve Bank of New York (approx. 1000 pieces, 1 kg) File:Geldscheine geschreddert und zu Block verpresst P5130163.jpg, Shredded and briquetted
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
banknotes from the Deutsche Bundesbank, Germany (approx. 1 kg)


Intelligent banknote neutralisation systems

Intelligent banknote neutralisation system An intelligent banknote neutralisation system (IBNS) is a security system which protects valuable items by rendering them unusable or easily detectable if an unauthorised individual tries to gain access to them. Dye packs are commonly used to safe ...
s (IBNS) are security systems which render banknotes unusable by marking them permanently as stolen with a degradation agent. Marked (stained) banknotes cannot be brought back into circulation easily and can be linked to the crime scene. Today's most used degradation agent is a special security ink which cannot be removed from the banknote easily and not without destroying the banknote itself, but other agents also exist. Today IBNSs are used to protect banknotes in
automated teller machine An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fun ...
s, retail machines, and during cash-in-transit operations.


Dynamic Intelligent Currency Encryption

Dynamic Intelligent Currency Encryption Dynamic Intelligent Currency Encryption (DICE) is an AI-controlled security technology, which devaluates banknotes and assets remotely that have been stolen or are illegal. The cash security system that is based on identifiable banknotes, was inve ...
(DICE) is a security technology introduced in 2014 by British company EDAQS, which devaluates banknotes remotely that are illegal or have been stolen. The technology is based on identifiable banknotes - that could be an RFID chip or a barcode - and connects to a digital security system to verify the validity of the banknote. The company claims that the banknotes are unforgeable and contribute to solve cash-related problems as well as fight crime and terrorism. In another note, the DICE benefits cover and solve almost all cash-related issues that are seen by governments to be a motivation for the progressive abolition of cash.


Confiscation and asset forfeiture

In the United States there are many laws that allow the confiscation of cash and other assets from the bearer if there is suspicion that the money came from an illegal activity. Because a significant amount of U.S. currency contains traces of
cocaine Cocaine (from , from , ultimately from Quechuan languages, Quechua: ''kúka'') is a central nervous system (CNS) stimulant mainly recreational drug use, used recreationally for its euphoria, euphoric effects. It is primarily obtained from t ...
and other illegal drugs, it is not uncommon for innocent people searched at airports or stopped for traffic violations to have cash in their possession sniffed by dogs for drugs and then have the cash seized because the dog smelled drugs on the money. It is then up to the owner of the money to prove where the cash came from at his own expense. Many people simply forfeit the money. In 1994, the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
Court of Appeals, Ninth Circuit, held in the case of ''UNITED STATES of America v. U.S. CURRENCY, $30,060.00'' (39 F.3d 1039 63 USLW 2351, No. 92-55919) that the widespread presence of illegal substances on paper currency in the Los Angeles area created a situation where the reaction of a drug-sniffing dog would not create probable cause for civil forfeiture.


Paper money collecting as a hobby

Banknote collecting, or
notaphily Notaphily is the study and collection of paper currency, and banknotes. A notaphilist is a collector of banknotes or paper money, particularly as a hobby. History It is believed that people have been collecting paper money for as long as it has ...
, is a slowly growing area of
numismatics Numismatics is the study or collection of currency, including coins, tokens, paper money, medals and related objects. Specialists, known as numismatists, are often characterized as students or collectors of coins, but the discipline also includ ...
. Although generally not as widespread as coin and
stamp collecting Stamp collecting is the collecting of postage stamps and related objects. It is an area of philately, which is the study (or combined study and collection) of stamps. It has been one of the world's most popular hobbies since the late nineteent ...
, the hobby is slowly expanding. Prior to the 1990s, currency collecting was a relatively small adjunct to coin collecting, but currency auctions and greater public awareness of paper money have caused more interest in rare banknotes and consequently their increased value. The most valuable banknote is the $1000 bill issued in 1890 that was sold at an auction for $2,255,000.


Trades

For years, the mode of collecting banknotes was through a handful of mail order dealers who issued price lists and catalogs. In the early 1990s, it became more common for rare notes to be sold at various coin and currency shows via auction. The illustrated catalogs and "event nature" of the auction practice seemed to fuel a sharp rise in overall awareness of paper money in the numismatic community. The emergence of currency third party grading services (similar to services that grade and "slab", or encapsulate, coins) also may have increased collector and investor interest in notes. Entire advanced collections are often sold at one time, and to this day single auctions can generate millions in gross sales. Today,
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became a ...
has surpassed auctions in terms of highest volume of sales of banknotes. However, rare banknotes still sell for much less than comparable rare coins. This disparity is diminishing as paper money prices continue to rise. A few rare and historical banknotes have sold for more than a million dollars. There are many different organizations and societies around the world for the hobby, including the International Bank Note Society (IBNS), which currently assert to have around 2,000 members in 90 countries.


Novelty

The universal appeal and instant recognition of bank notes has resulted in a plethora of novelty merchandise that is designed to have the appearance of paper currency. These items cover nearly every class of product. Cloth material printed with bank note patterns is used for clothing, bed linens, curtains, upholstery and more. Acrylic paperweights and even toilet seats with bank notes embedded inside are also common. Items that resemble stacks of bank notes and can be used as a seat or ottoman are also available. Manufacturers of these items must take into consideration when creating these products whether the product could be construed as counterfeiting. Overlapping note images and/or changing the dimensions of the reproduction to be at least 50% smaller or 50% larger than the original are some ways to avoid the risk of being considered a counterfeit. But in cases where realism is the goal, other steps may be necessary. For example, in the stack of bank notes seat mentioned earlier, the decal used to create the product would be considered counterfeit. However, once the decal has been affixed to the resin stack shell and cannot be peeled off, the final product is no longer at risk of being classified as counterfeit, even though the resulting appearance is realistic.


See also


Notes and references


Bibliography

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External links


Counterfeit money was a major problem in the 1850s - Pantagraph
(Bloomington, Illinois newspaper) {{Authority control Accounting source documents Paper products Watermarking Written communication Ancient inventions