Routledge Dictionary of Economics, Second Edition
Paper CURRENCY issued by a bank. Although the first known notes were issued by Chinese banks in the eleventh century, it was not until the eighteenth and nineteenth centuries that they substantially replaced coinage and BILLS OF EXCHANGE.
In London, banknotes originally took the form of receipts for bullion stored with goldsmiths and then became a form of bank advance when banks discovered their power to create money. When countries were on the GOLD STANDARD, it was possible to convert banknotes into bullion; since 1931 notes have been FIAT MONEY. In most countries the only note issue today is that of the CENTRAL BANK (the limited power of Scottish banks to issue notes is exceptional).
See also: Bradbury
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