The history of paper money is longer than most people realize. There is evidence the Kao-tsung dynasty in China used paper money about A.D. 650 to 683, although no examples survive. Paper receipts called Jiao Zi issued for metal coins on deposit were introduced in 1024 in China. Kublai Khan went as far as to abolish metal coins in 1277. Marco Polo is generally credited with bringing the concept of paper money to Europe, however the priest William of Rubruck reported paper money being used in Mongolia to the court of Louis IX of France as early as 1255. It appears King James I of Catalonia and Aragon may have beat both of them, issuing paper money as early as 1250.

Ever since moveable type became popular, governments have continuously attempted to improve on paper money printing techniques in order to stay one step ahead of counterfeiters.

The first true bank note was issued by the Stockholm Banco in Sweden in 1661. The activities of the bank were a precursor to what was to later come. The bank issued notes of greater value than were the precious metal reserves to back the notes, forcing the bank to eventually close.

Paper money was first issued in North America in 1685 when the paymaster for the French army in Canada issued promissory notes when the ship carrying the pay in specie (precious metal coins) was late arriving. The notes were to be redeemed when the hard cash arrived, however due to counterfeiting, inflation, and note discounting the issue was not a success.