Paper money
Also called: paper currency, banknotes · Topic: Money: From Barter to Digital Currency · NCERT: Class 7, Ch 11 "From Barter to Money"
Meaning
Paper money means currency notes used for higher-value payments. Once coins were used for everything, from buying vegetables to buying land, carrying and storing large amounts of them became impractical. Paper money was first used in China and reached India in the late 18th century. Today's notes are fiat money. The paper itself is worth little; the value comes from the guarantee of the issuer.
Example
Early Indian issuers included:
- the Bank of Hindostan (1770)
- the General Bank of Bengal and Bihar (1773)
- the Presidency banks, such as the Bank of Bengal and the Bank of Bombay
The Paper Currency Act of 1861 gave the Government of India the monopoly of note issue. RBI took over note issue in 1935 and issued its first note, a ₹5 note, in 1938.
Don't confuse with
- Currency: paper money is only the notes. Currency means both notes and coins.