1000 BC – AD 400 First coins of Aegina. Obverse: Land turtle. Reverse: ΑΙΓ(INA) and dolphin From about 1000 BC, money in the form of
small knives and spades made of bronze was in use in China during the
Zhou dynasty, with cast bronze replicas of cowrie shells in use before this. The first manufactured actual coins seem to have appeared separately in India, China, and the cities around the
Aegean Sea 7th century BC. While these Aegean coins were stamped (heated and hammered with insignia), the Indian coins (from the Ganges river valley) were punched metal disks, and Chinese coins (first developed in the Great Plain) were cast bronze with holes in the center to be strung together. The different forms and metallurgical processes imply a separate development. All modern coins are descended from the coins that appear to have been invented in the
kingdom of Lydia in
Asia Minor somewhere around 7th century BC and that spread throughout
Greece in the following centuries: disk-shaped, made of
gold,
silver,
bronze or imitations thereof, with both sides bearing an image produced by stamping; one side is often a human head. Maybe the first ruler in the Mediterranean known to have officially set standards of weight and money was
Pheidon.
Minting occurred in the late 7th century BC amongst the Greek cities of
Asia Minor, spreading to the Greek islands of the Aegean and to the south of Italy by 500 BC. dates to about 7th century BC. Herodotus dated the introduction of coins to Italy to the Etruscans of
Populonia in about 550 BC. Other coins made of electrum (a naturally occurring alloy of silver and gold) were manufactured on a larger scale about 7th century BC in
Lydia (on the coast of what is now Turkey). Similar coinage was adopted and manufactured to their own standards in nearby cities of
Ionia, including
Mytilene and
Phokaia (using coins of
electrum) and
Aegina (using silver) during the 7th century BC, and soon became adopted in mainland Greece, and the Persian Empire (after it incorporated Lydia in 547 BC). The use and export of
silver coinage, along with soldiers paid in coins, contributed to the
Athenian Empire's dominance of the region in the 5th century BC. The silver used was mined in southern
Attica at
Laurium and Thorikos by a huge workforce of slave labour. A major silver vein discovery at Laurium in 483 BC led to the huge expansion of the Athenian military fleet.
Roman currency '' of
Julius Caesar, 44 BC '' of
Nero, '' of
Septimius Severus, The worship of
Moneta is recorded by Livy with the temple built in the time of Rome; a temple consecrated to the same goddess was built in the earlier part of the 4th century (perhaps the same temple). For four centuries the temple contained the mint of Rome. This goddess became the personification of money, and her name was applied both to money and to its place of manufacture. The name of the goddess thus became the source of numerous words in
English and the
Romance languages, including the words "
money" and "
mint". Roman mints were spread widely across the Empire, and were sometimes used for propaganda purposes. The populace often learned of a new Roman Emperor when coins appeared with the new emperor's portrait.
Roman currency for most of
Roman history consisted of gold, silver,
bronze,
orichalcum and copper
coinage. From its introduction during the
Republic, in the third century BC, through
Imperial times, Roman currency saw many changes in form, denomination, and composition. A persistent feature was the inflationary debasement and replacement of coins over the centuries. Notable examples of this followed the reforms of
Diocletian. This trend continued with
Byzantine currency. After the
fall of the Western Roman Empire, the
solidus continued to circulate for some time among the
Franks; his name was kept and transformed into "sol" in French, then "sou". The peoples settled in the Empire,
Burgundians,
Ostrogoths and
Visigoths, also issued coins imitating the Roman system, including the
solidus. Roman currency names survive today in many countries via the
Carolingian monetary system, such as the Arabic
dinar (from the
denarius coin), the British
pound, the
peso (both translations of the Roman
libra, a unit of weight), and Portuguese
dinheiro (from the
denarius coin). While they contained
precious metals, the value of a coin was higher than its precious metal content, so they were not
bullion. Estimates of their value range from 1.6 to 2.85 times their metal content, thought to equal the purchasing power of 10 modern British Pound Sterling (US$15) at the beginning of the Roman Empire to around 18 Pound Sterling (US$29) by its end (comparing bread, wine and meat prices) and, over the same period, around one to three days' pay for a legionnaire.
400–1450 Medieval coins and moneys of account , 1347
Charlemagne, in 800 AD, implemented a series of reforms upon becoming "
Holy Roman Emperor", including the issuance of a standard coin, the silver penny. Between 794 and 1200 the penny was the only denomination of coin in Western Europe. Minted without oversight by bishops, cities, feudal lords and
fiefdoms, by 1160, coins in Venice contained only 0.05g of silver, while England's coins were minted at 1.3g. Large coins were introduced in the mid-13th century. In England, a dozen pennies was called a "shilling" and twenty shillings a "pound": consistent with e.g. France.
Debasement of coin was widespread. There were periods of significant debasement in 1340–60 and 1417–29, when no small coins were minted, and by the 15th century the issuance of small coin was further restricted by government restrictions and even prohibitions. With the exception of the
Great Debasement, England's coins were consistently minted from sterling silver (silver content of 92.5%). A lower quality of silver with more copper mixed in, used in Barcelona, was called
billon.
Italy has been influential at a coinage point of view: the
Florentine florin, one of the most used coinage types in European history and one of the most important coins in Western history, was struck in
Florence in the
13th century, while the
Venetian sequin, minted from 1284 to 1797, was the most prestigious gold coin in circulation in the commercial centers of the
Mediterranean Sea. The Florentine florin was the first
European gold coin struck in sufficient quantities since the 7th century to play a significant commercial role. The Florentine florin was used for larger transactions such as those used in dowries, international trade or for tax-related matters.
First paper money Paper money was introduced in
Song dynasty China during the 11th century. The development of the banknote began in the 7th century, with local issues of paper currency. Its roots were in merchant
receipts of deposit during the
Tang dynasty (618–907), as
merchants and wholesalers desired to avoid the heavy bulk of
copper coinage in large commercial transactions. The Song government had run out of copper to strike new coins, and as such issued the first generally circulating notes, named
jiaozi. These notes were a promise by the ruler to redeem them later for some other object of value, usually
specie. The jiaozi did not replace coins, but was used alongside the coins. The central government soon observed the economic advantages of printing paper money, issuing a monopoly right of several of the deposit shops to the issuance of these certificates of deposit. By the early 12th century, the banknotes issued in a single year amounted to 26 million strings of cash coins. , known as
rūpyarūpa, with symbols of wheel and elephant. 3rd century BC issued rupees in the name of
Muhammad Shah (1719–1748) for Northern India trade. This was cast in
Pondicherry. In the 13th century, paper money became known in Europe through the accounts of travelers, such as
Marco Polo and
William of Rubruck. Marco Polo's account of paper money during the
Yuan dynasty is the subject of a chapter of his book,
The Travels of Marco Polo, titled "
How the Great Kaan Causeth the Bark of Trees, Made into Something Like Paper, to Pass for Money All Over his Country." In
medieval Italy and
Flanders, because of the insecurity and impracticality of transporting large sums of money over long distances, money traders started using
promissory notes. In the beginning these were personally registered, but they soon became a written order to pay the amount to whoever had it in their possession. These notes can be seen as a predecessor to regular banknotes.
Trade bills of exchange Bills of exchange became prevalent with the expansion of European trade toward the end of the Middle Ages. A flourishing Italian wholesale trade in cloth, woolen clothing, wine, tin and other commodities was heavily dependent on credit for its rapid expansion. Goods were supplied to a buyer against a bill of exchange, which constituted the buyer's promise to make payment at some specified future date. Provided that the buyer was reputable or the bill was endorsed by a credible guarantor, the seller could then present the bill to a merchant banker and redeem it in money at a discounted value before it actually became due. The main purpose of these bills nevertheless was, that traveling with cash was particularly dangerous at the time. A deposit could be made with a banker in one town, in turn a bill of exchange was handed out, that could be redeemed in another town. These bills could also be used as a form of payment by the seller to make additional purchases from his own suppliers. Thus, the bills – an early form of credit – became both a medium of exchange and a medium for storage of value. Like the loans made by the Egyptian grain banks, this trade credit became a significant source for the creation of new money. In England, bills of exchange became an important form of credit and money during last quarter of the 18th century and the first quarter of the 19th century before banknotes, checks and cash credit lines were widely available.
Islamic Golden Age At around the same time in the
medieval Islamic world, a vigorous monetary economy was created during the 7th–12th centuries on the basis of the expanding levels of circulation of a stable high-value currency (the
dinar). Innovations introduced by Muslim economists, traders and merchants include the earliest uses of
credit,
cheques,
promissory notes,
savings accounts,
transactional accounts,
loaning,
trusts,
exchange rates, the transfer of credit and
debt, and
banking institutions for loans and
deposits. along with the Lydian
staters, several other Middle Eastern coinages and the
Chinese wen. The Indian
rūpya is a Sanskrit term for
silver coin, from Sanskrit rūpa, meaning a beautiful form.
Sher Shah Suri (1540–1545) introduced a silver coin called a
rupiya. Its use was continued by the
Mughal Empire. The imperial
taka was officially introduced by the monetary reforms of
Muhammad bin Tughluq, the emperor of the
Delhi Sultanate, in 1329. It was modeled as
representative money, a concept pioneered as paper money by the
Mongols in
China and
Persia. The taka was minted in copper and brass. Its value was exchanged with gold and silver reserves in the imperial treasury. The currency was introduced due to the shortage of metals.
Tallies The acceptance of symbolic forms of money meant that a symbol could be used to represent something of value that was available in physical storage somewhere else in space, such as grain in the warehouse; or something of value that would be available later, such as a promissory note or
bill of exchange, a document ordering someone to pay a certain sum of money to another on a specific date or when certain conditions have been fulfilled. In the 12th century, the English monarchy introduced an early version of the bill of exchange in the form of a notched piece of wood known as a
tally stick. Tallies originally came into use at a time when paper was rare and costly, but their use persisted until the early 19th century, even after paper money had become prevalent. The notches denoted various amounts of taxes payable to the Crown. Initially tallies were simply a form of receipt to the taxpayer at the time of rendering his dues. As the revenue department became more efficient, they began issuing tallies to denote a promise of the tax assessee to make future tax payments at specified times during the year. Each tally consisted of a matching pair – one stick was given to the assessee at the time of assessment representing the amount of taxes to be paid later, and the other held by the Treasury representing the amount of taxes to be collected at a future date. The Treasury discovered that these tallies could also be used to create money. When the Crown had exhausted its current resources, it could use the tally receipts representing future tax payments due to the Crown as a form of payment to its own creditors, who in turn could either collect the tax revenue directly from those assessed or use the same tally to pay their own taxes to the government. The tallies could also be sold to other parties in exchange for gold or silver coin at a discount reflecting the length of time remaining until the tax was due for payment. Thus, the tallies became an accepted medium of exchange for some types of transactions and an accepted store of value. Like the girobanks before it, the Treasury soon realized that it could also issue tallies that were not backed by any specific assessment of taxes. By doing so, the Treasury created new money that was backed by public trust and confidence in the monarchy rather than by specific revenue receipts.
1450–1971 Goldsmith bankers Goldsmiths in England had been craftsmen, bullion merchants, money changers, and money lenders since the 16th century. However, they were not the first to act as
financial intermediaries; in the early 17th century, the
scriveners were the first to keep deposits for the express purpose of relending them. Merchants and traders had amassed huge hoards of gold and entrusted their wealth to the
Royal Mint for storage. In 1640 King
Charles I seized the private gold stored in the mint as a forced loan (which was to be paid back over time). Thereafter merchants preferred to store their gold with the goldsmiths of London, who possessed private vaults, and charged a fee for that service. In exchange for each deposit of precious metal, the goldsmiths issued receipts certifying the quantity and purity of the metal they held as a bailee (i.e., in trust). These receipts could not be assigned (only the original depositor could collect the stored goods). Gradually the goldsmiths took over the function of the scriveners of relending on behalf of a depositor and also developed modern banking practices;
promissory notes were issued for money deposited, which by custom and/or law was a loan to the goldsmith, i.e., the depositor expressly allowed the goldsmith to use the money for any purpose including advances to his customers. The goldsmith charged no fee, and might even pay interest on these deposits. Since the promissory notes were payable on demand, and the advances (loans) to the goldsmith's customers were repayable over a longer time period, this was an early form of
fractional reserve banking. The promissory notes developed into an assignable instrument, which could circulate as a safe and convenient form of money backed by the goldsmith's promise to pay. Hence goldsmiths could advance loans in the form of gold money, or in the form of promissory notes, or in the form of checking accounts. Gold deposits were relatively stable, often remaining with the goldsmith for years on end, so there was little risk of default so long as public trust in the goldsmith's integrity and financial soundness was maintained. Thus, the goldsmiths of London became the forerunners of British banking, and prominent creators of new money based on credit.
First European banknotes banknote The first European banknotes were issued by
Stockholms Banco, a predecessor of Sweden's central bank
Sveriges Riksbank, in 1661. These replaced the copper-plates being used instead as a means of payment, although in 1664 the bank ran out of coins to redeem notes and ceased operating in the same year. In 1696, the
Bank of Scotland became the first European bank to successful print its own paper banknotes, entering into circulation the same year. The Bank of Scotland is the longest continuous distributor of banknotes in the world. Inspired by the success of the London goldsmiths, some of whom became the forerunners of great English banks, banks began issuing paper notes quite properly termed "
banknotes", which circulated in the same way that government-issued currency circulates today. In England this practice continued up to 1694. In the United States, this practice continued through the 19th century; at one time there were more than 5,000 different types of banknotes issued by various commercial banks in America. Only the notes issued by the largest, most creditworthy banks were widely accepted. The scrip of smaller, lesser-known institutions circulated locally. Farther from home it was only accepted at a discounted rate, if at all. The proliferation of types of money went hand in hand with a multiplication in the number of financial institutions. These banknotes were a form of representative money which could be converted into gold or silver by application at the bank. Since banks issued notes far in excess of the gold and silver they kept on deposit, sudden loss of public confidence in a bank could precipitate mass redemption of banknotes and result in bankruptcy. In India the earliest paper money was issued by Bank of Hindostan (1770–1832), General Bank of Bengal and Bihar (1773–1775), and Bengal Bank (1784–1791). The use of banknotes issued by private commercial banks as
legal tender has gradually been replaced by the issuance of bank notes authorized and controlled by national governments. The
Bank of England was granted sole rights to issue banknotes in England after 1694. In the United States, the
Federal Reserve Bank was granted similar rights after its establishment in 1913. Until recently, these government-authorized currencies were forms of representative money, since they were partially backed by gold or silver and were theoretically convertible into gold or silver.
Golden age of Genoese banking Genoese currency became important in the 16th century during the
Golden age of Genoese banking, with the
Spanish Empire funnelling its massive wealth from
Spanish America through the
Bank of Saint George. With the decline in the fortunes of the Genoese banks and the
Spanish Empire in the 17th century, however, the
Genoese lira also depreciated substantially. The silver scudo's value increased to 6.5 lire in 1646, 7.4 lire in 1671, and 8.74 lire just before the
Austrian occupation of Genoa in 1746. In the 15th century, two of the earliest banks in the world were founded in the
Republic of Genoa: the
Bank of Saint George, founded in 1407, which was the oldest state deposit bank in the world at its closure in 1805, and the
Banca Carige, founded in 1483 as a
mount of piety, which existed until 2022 Threatened by
Alfonso V of Aragon, the
Doge of Genoa in 1458 handed the Republic over to the French, making it the Duchy of Genoa under the control of
John of Anjou, a French royal governor. However, with support from Milan, Genoa revolted and the Republic was restored in 1461. The Milanese then changed sides, conquering Genoa in 1464 and holding it as a fief of the French crown. Between 1463–78 and 1488–99, Genoa was held by the Milanese
House of Sforza. From 1499 to 1528, the Republic of Genoa reached its nadir, being under nearly continual French occupation. The Spanish, with their intramural allies, the "old nobility" entrenched in the mountain fastnesses behind Genoa, captured the city on May 30, 1522, and subjected the city to a pillage. When the admiral
Andrea Doria of the powerful
Doria family allied with the
Emperor Charles V to oust the French and restore Genoa's independence, a renewed prospect opened: 1528 marks the first loan from Genoese banks to Charles. Under the ensuing economic recovery, many aristocratic Genoese families, such as the Balbi, Doria, Grimaldi, Pallavicini, and Serra, amassed tremendous fortunes. According to Felipe Fernandez-Armesto and others, the practices Genoa developed in the Mediterranean (such as
chattel slavery) were crucial in the exploration and exploitation of the New World. At the time of Genoa's peak in the 16th century, the city attracted many artists, including
Rubens,
Caravaggio, and
van Dyck. The architect
Galeazzo Alessi (1512–1572) designed many of the city's splendid
palazzi. In the next 50 years, other palazzi were designed by
Bartolomeo Bianco (1590–1657), designer of centrepieces of the
University of Genoa. A number of
Genoese Baroque and Rococo artists settled elsewhere and a number of local artists became prominent. Thereafter, Genoa underwent something of a revival as a junior associate of the Spanish Empire, with Genoese bankers, in particular, financing many of the Spanish crown's foreign endeavors from their
counting houses in Seville. However, the modern visitor passing brilliant Mannerist and Baroque palazzo facades along Genoa's
Strada Nova (now Via Garibaldi) or
via Balbi cannot fail to notice that there was conspicuous wealth, which in fact was not Genoese but concentrated in the hands of a tightly knit circle of banker-financiers, true "
venture capitalists". Genoa's trade, however, remained closely dependent on control of Mediterranean sealanes, and the loss of
Chios to the
Ottoman Empire (1566), struck a severe blow. The opening for the Genoese banking consortium was the
state bankruptcy of
Philip II in 1557, which threw the German banking houses into chaos and ended the reign of the
Fuggers as Spanish financiers. The Genoese bankers provided the unwieldy Habsburg system with fluid credit and a dependably regular income. In return the less dependable shipments of American silver were rapidly transferred from Seville to Genoa, to provide capital for further ventures. From about 1520 the Genoese controlled the Spanish
port of Panama, the first port on the Pacific, founded by the conquest of the Americas. The Genoese obtained a concession to exploit the port mainly for the slave trade of the new world on the Pacific, which lasted until the sacking and destruction of the original city in 1671. In the meantime in 1635 Don
Sebastián Hurtado de Corcuera, the then governor of Panama, had recruited Genoese, Peruvians, and Panamanians, as soldiers to wage war against Muslims in the Philippines and to found the city
of Zamboanga upon the conquests of the Sultanates of
Sulu and
Maguindanao. In this situation Genoese Bankers were thus active in Spain's Mediterranean and New World possessions (Peru, Mexico, and
Philippines).
1971–present In 1971, United States President
Richard Nixon announced that the
US dollar would not be
directly convertible to gold any more. This measure effectively destroyed the
Bretton Woods system by removing one of its key components, in what came to be known as the
Nixon shock. Since then, the US dollar, and thus all national currencies, are
free-floating currencies. Additionally, international, national and local money is now dominated by
virtual credit rather than
real bullion. Since 1980, credit card companies have been exempt from
state usury laws in the United States, and so can charge any interest rate they see fit. Outside the US, other payment cards became more popular than credit cards, such as
France's
Carte Bleue.
Digital currency The development of computer technology in the second part of the twentieth century allowed money to be represented digitally. By 1990, in the United States, all money transferred between its central bank and commercial banks was in electronic form. By the 2000s most money existed as
digital currency in banks' databases. In 2012, by number of transactions, 20 to 58 percent of transactions were electronic (dependent on country).
Cryptocurrencies In 2008,
Bitcoin was proposed under the pseudonym of
Satoshi Nakamoto. It was implemented the same year. Its use of
cryptography allowed the currency to have a trustless, non-fungible and tamper resistant
distributed ledger called a
blockchain. It became the first widely used
decentralized,
peer-to-peer,
cryptocurrency. Other comparable systems had been proposed since the 1980s. The
cryptographic protocol solved what is known as the
double-spending problem without the need of a trusted third-party. Since Bitcoin's inception, thousands of other cryptocurrencies have been introduced. ==See also==