Sweden adopted paper money because its copper coins weighed kilograms
Money began as receipts for grain stored in Sumerian and Egyptian temples. Paper notes emerged in China between the Tang and Song dynasties, but Europe's first regular paper currency came from Sweden in 1661, for a practical reason: its copper coins were so low in value that some weighed several kilograms each.
Early currency was a promise backed by stored goods, with metal tokens standing for grain in granaries, a system that underpinned Fertile Crescent trade for over 1,500 years. Its weakness was security: money could be only as trustworthy as the force guarding the store. In the late Bronze Age, treaties protected merchants from Crete to Bahrain, possibly using copper ingots shaped like oxhides and made in Cyprus, until the piracy of the Bronze Age collapse ended that network. Real coins appeared later, perhaps first in Lydia under Croesus.
Stamped metal coins guaranteed a known weight, and most coin-using economies ran tiers of gold for big payments, silver for middling ones and copper for daily purchases, as ancient India did from the time of the Mahajanapadas. The relative values shifted when new mines opened in the Harz mountains or silver poured in from the Americas. In China, merchants swapped heavy strings of copper coins for deposit receipts, and by the mid 13th century uniform government paper money circulated nationwide, helped by woodblock and movable-type printing. The medieval Islamic world, built around the stable dinar, pioneered cheques, credit transfers and savings accounts.
Paper had clear advantages, sparing risky shipments of gold and silver and making loans and share sales easier. Its danger was that authorities could print beyond their reserves, and in the 18th century David Hume observed the resulting inflation. Paper money became linked to financing wars and was long viewed with suspicion in Europe and America. By 1900 most industrialising countries were on a gold standard, with banks hoarding metal and paying out notes, in line with Gresham's law.
The gold link frayed through wars and crises, and the United States cut the last major tie in 1971, the Nixon shock; no country now has an enforceable metal standard. Australia's scientists developed polymer banknotes, circulated from the 1988 bicentenary after the Isle of Man tried them in 1983, and by 2016 over 20 countries used them because they last longer and resist forgery. Since 1978 the ISO 4217 standard has given each currency a three-letter code.
Source: Currency
