Who Invented Paper Money?

The use of paper money is one thing that most of us take for granted. That is to be expected of course since everything that we do in our daily lives involve, in one way or another, the use of paper money. This is why it is hard to imagine a time when money exclusively refers to coins since the use of paper as a form of currency came in a much, much later era. This makes the question of who invented paper money an unlikely query in most people’s mind. But with its importance, it is definitely a good thing to know who invented paper money.

Who invented paper money? This is not a simple question to answer as paper money is unlike other tools that came to be thanks to an inventor who designed and made them first. This is because the use of paper money is not pioneered by a single individual. Rather, the use of paper money was first used by a group of people who realized that using coins was cumbersome since accumulating great amounts of it will provide one with difficulties, particularly with transporting the huge amounts from place to place.

So who are this people who invented paper money? The pioneering use of paper money is widely credited to the Chinese, who used it around 650 AD. Asking who invented paper money will also inevitably lead one to another important question: why? The use of paper money began when people decided to deposit their large sums of money (which were all in coins) in vaults owned by enterprising individuals who make a profit safeguarding other people’s riches. In return, depositors get promissory notes from these enterprising individuals indicating the amount of money that they left in the vaults. These promissory noted then became the first paper money, as they were later used as a form of currency since the promissory notes themselves can be used for trade with other people.

Swedes are the other group of people who invented paper money, at least in the European continent. Their adoption of the use of paper money may be hundreds of years behind the Chinese’ but their official use of paper currency led to their widespread use in the Western world. After Sweden used paper money, governments not only in Europe but around the world have made the paper money a staple of trade and commerce.

Paper money is an invaluable element of everyday commerce for the convenience of its use compared to coins and we can thank the Chinese and the Swedes for that, as they are the people who invented paper money and pioneered its subsequent widespread use.