First paper currency

Paper money was first invented in Chengdu during the Song Dynasty (960-1279).

At that time, the common currency in Sichuan was tieqian (iron coins), which were too heavy to transport.

As Chengdu's economy boomed and trade increased, local merchants needed a more convenient way to carry large sums of money.

As a result, they invented jiaozi which was basically pieces of paper used as a certificate of deposit.

Traders were issued jiaozi after depositing strings of coins in a jiaozi shop. When they needed money to buy goods in different places, they could withdraw coins by presenting jiaozi to any accredited shop.

Jiaozi became increasingly popular among merchants, so that it began to serve as money itself.

In 1023, the government took over the production of jiaozi and founded a jiaozi office in Chengdu, which issued the first batch of official banknotes one year later. The office was hence regarded by scholars as the world's first central bank.