Flying cash was a paper currency of Tang Dynasty China and can be considered the first banknote.[1]
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Due to inconveniences in transferring large numbers of the standard copper cash coins over large distances, the Tang government decided to pay merchants with which they did business in paper money. Due to their tendency to fly away, the notes were dubbed "flying cash."[2]
Flying cash was never originally meant to be used as legal tender and, therefore, their circulation was limited. However, since they could be exchanged for hard currency at the capital, they were traded amongst merchants as if they were currency. It wasn't until the Song Dynasty and subsequent Jin occupation that paper money was officially established as a legal tender. The use of paper money spread westward through Mongol traders and, by 1661, European countries were printing paper currency.
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