Hence Carthage may be the oldest user of lightweight promissory notes. However, Carthage was purported to have issued bank notes on parchment or leather before 146 BC. Rome may have used a durable lightweight substance as promissory notes in 57 AD which have been found in London. In China during the Han dynasty, promissory notes appeared in 118 BC and were made of leather. 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 for replacement of deposits stolen while in their possession. Law 122 stipulated that a depositor of gold, silver, or other chattel/movable property for safekeeping must present all articles and a signed contract of bailment to a notary before depositing the articles with a banker, 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. 1755–1750 BC) stipulated repayment of a loan by a debtor to a creditor on a schedule with a maturity date specified in written contractual terms.

With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.Ĭode of Hammurabi Law 100 ( c. Today, most national currencies have no backing in precious metals or commodities and have value only by fiat. This practice of 'backing' notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. National banknotes are often – but not always – legal tender, meaning that courts of law are required to recognize them as satisfactory payment of money debts. Commercial banknotes have primarily been replaced by national banknotes issued by central banks or monetary authorities.

These commercial banknotes only traded at face value in the market served by the issuing bank. A banknote-also called a bill ( North American English), paper money, or simply a note-is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand.īanknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender (usually gold or silver coin) when presented to the chief cashier of the originating bank.

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