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Merchants began to use privately issued paper certificates called 'flying money' (feiqian) that could be exchanged for metal coins Discover how ancient china's invention of paper money revolutionized silk road trade, boosting economic growth and cultural exchange across the region. These certificates represented the first step toward paper currency, establishing the fundamental concept that paper could represent stored value, revolutionizing trade.
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The first paper money was called 'flying money' and was an official printed receipt that was far more convenient and safer to transport compared to the alternatives for large transactions. These notes were issued by merchants and could be exchanged for coin at different locations. From then on, a paper money economy, backed by silver, replaced a previously chaotic monetary system that mixed various types of paper money with copper coins, iron coins, and silver ingots (figure 1).
The paper currency issued in the southern song dynasty, known as bianqian huizi or “convenient money association,” were used as bills of exchange, checks, and other instruments.
For much of the ming era, silver was the currency of choice, including tons of mexican and peruvian ingots brought to china by spanish traders. The use of paper currency was initiated by merchants To avoid having to carry thousands of strings of coins long distances, merchants in late tang times (c 900 ce) started trading receipts from deposit shops where they had left money or goods.
Paper money in china was backed by precious metals such as gold and silver, which helped maintain the currency’s value and prevent inflation The government introduced a system of monetary policies to regulate the issuance of paper money, ensuring that it remained tied to the government’s reserves. At that time, merchants used “flying money” (feiqian), which were essentially promissory notes
