How ordinary paper banknotes survive the economy
Have you ever wondered why money in your pocket or purse is so important? It is a note on ordinary paper. Not gold or silver. Ordinary money. Not very special in terms of price. But even then it survived in our economy. Today's discussion is about this topic. How did it survive in the economy, surpassing things like paper money, gold and silver money?
During the Mesopotamian civilization around 6000 BC. The system of change was introduced here by the Phoenicians, an ethnic group. They introduced an exchange system to sell the grain produced. The Babylonians later developed the system. They exchanged food, weapons and equipment. Around 3000 BC, the Sumerians used the first money to sell barley. Later, in 700 BC, coins made of hybrids of silver and gold were introduced in Lydia. Lydia, in today's western world, was the first country in the Western world to introduce a well-organized and state-run monetary system.
The introduction of paper money or banknotes began in China during the Tang period (618-907). The Chinese learned to make paper from the bark of a mulberry tree even 600 years ago. It was paper heavy at first because it was made directly from tree bark. Later, they learned to make paper by cutting the soft part of the stem without using the bark of the tree. This made the paper lighter. The writing is easy to understand because it is light.
During the Tang period, the expansion of trade caused an increase in the volume of the coins traded. Coins such as gold and silver were expensive, and sea travel was a risky business. So they started accepting paper commitments of equal value in exchange for coins. Let's get the point clearer. Suppose you have 50 ounces of gold. You deposited 50 ounces of gold in the bank (then in the state treasury or royal palace) and wrote on a piece of paper that you would get 50 ounces of gold back with this paper at any time. This means that the price of that paper is equal to 50 ounces below. In this, your gold coins remained under state custody and you remained safe.
