"My notion of a wife at 40 is that a man should be able to change her, like a banknote, for two 20s."
When Marco Polo traveled to China in the late thirteenth century he was astonished to see the locals use paper money instead of coins. Prompted by a copper shortage, the Tang Dynasty (618-907) introduced this new monetary system in 806, more than 800 years before the first European banknotes.
While commodity money (the trading of goods that have an intrinsic value, such as gold and cattle) has been around since the dawn of civilization, the first standardized coinage is thought to have appeared in Lydia (western Asia Minor) in the seventh century B.C.E. This was the first time that the nominal value of money was higher than the worth of its inherent material. Ancient Greek historian Herodotus criticized the "gross commercialism" that this system induced.
Swedish bank Stockholms Banco issued the first European banknotes in 1660. Once again, a shortage of copper was to blame. Customers had loaned copper to the bank, but demanded it back when their coins' copper content was reduced, making the copper more valuable than the coins. Unable to respond to the demand, the institution came up with promissory banknotes to solve their liquidity problem.
The Chinese were the first to discover the risks of using money without inherent worth. By 1020 the cost of imported goods, coupled with bribes given to potential invaders, had forced the government to issue more and more notes, thereby fueling inflation. By 1455 paper money had become so devalued that the Ming Dynasty (1368-1644) decided to get rid of it altogether, leaving the world without circulating banknotes for another 200 years
