A bank note is a legally acceptable medium of exchange for goods and services. Bank notes exist around the world and every country creates its own unique designs. But the first country to develop paper currency, according to Wikipedia, an encyclopedia, was China during the Tang Dynasty of the 7th Century.
During this time, wealthy merchants who found their currency coins too bulky to carry would leave them with a trustworthy person who would give them a piece of paper indicating how much they had kept. Later, paper notes were used as a promise to pay. This is according to Bank Note World, a company that produces bank notes.
Paper money eventually took over during the Song Dynasty in the 11th Century when there was a shortage of copper and the government of China issued licenses to shops to receive coins from people and exchange them for paper notes. According to the National Bank of Belgium, the Chinese government eventually took over the role of printing and circulating paper money.
During the Yuan Dynasty that began in 1279, paper money became the official currency of China. Factories for paper money were set up during this time and they went to great lengths to prevent counterfeiting. According to ThoughtCo, an education website, the money would expire after three years. Furthermore, its use was limited to particular regions until a national currency was introduced.
The use of paper money spread to other continents by the 13th Century. Europe, in particular, is said to have known of its existence when famous Venetian traveller Marco Polo wrote a whole chapter of a book about it after his visit to China. According to Time, a media source, the idea of paper money was first met with resistance in Europe and it took about four centuries before it was adopted.
As it spread to other continents, China was facing the challenge of inflation because of too much paper money circulation. Because of this, its use was banned until the Qing Dynasty of 1890s when it was circulated again. This is according to Searching in History, a web-based knowledge platform.
According to economic magazine Financial Times, continents which adopted the use of paper money also first used them as promissory notes which could be used to redeem gold or other coins, just like it was done at first in China.
In the modern world, some people prefer not to carry bulks of money and prefer to do direct bank transactions but overall, the use of paper money is still popular.