Paper currency was a by-product of Chinese block-printing. It started in Tang but not until Song dynasty that it become
institutionalized as a government policy. It had two main advantages over money made out of silver, gold, copper
or iron: it was easier to carry around and the copper and iron could be saved
for use in everyday objects. Names and seals were printed and written on paper money by the government officials who
issued it. Unfortunately no written documents exist today which enables us to know how this system of paper
currency actually functioned prior to the Yang period. When Marco Polo traveled to China in the 13th
century, he was so impressed by paper money that he described how it was made,
used and valued. Paper money was not used in Europe until the 17th century.
Paper money began with the “flying cash” of the Tang (618-907) dynasty around 800.
The Tang government considering the inconvenience of shipping cash to distant areas where government purchases were
made, paid local merchants with money certificates called “flying cash”,
because of the its tendency to blow away. These certificates bearing different amounts of money were could be
converted into hard cash on demand at the capital. Since they were transferable, they were exchanged among merchants
almost like money.
