We buy individual notes or entire collections.
We buy issued, unissued and specimens.
A banknote (often known as a bill, paper money or
simply a note) is a kind of negotiable instrument, a
promissory note made by a bank payable to the bearer
on demand, used as money, and in many jurisdictions
is legal tender. Along with coins, banknotes make up
the cash or bearer forms of all modern fiat money.
With the exception of non-circulating high-value or
precious metal commemorative issues, coins are used
for lower valued monetary units, while banknotes are
used for higher values.
Paper money originated in two forms: drafts,
which are receipts for value held on account, and
"bills", which were issued with a promise to convert
at a later date.
Money is based on the coming to pre-eminence of
some commodity as payment. The oldest monetary basis
was for agricultural capital: cattle and grain. In
Ancient Mesopotamia, drafts were issued against
stored grain as a unit of account. A "drachma" was a
weight of grain. Japan's feudal system was based on
rice per year – koku.
At the same time, legal codes enforced the
payment for injury in a standardized form, usually
in precious metals. The development of money then
comes from the role of agricultural capital and
precious metals having a privileged place in the
Such drafts were used for giro systems of banking
as early as Ptolemaic Egypt in the 1st century BC.
The perception of banknotes as money has evolved
over time. Originally, money was based on precious
metals. Banknotes were seen as essentially an I.O.U.
or promissory note: a promise to pay someone in
precious metal on presentation (see representative
money). With the gradual removal of precious metals
from the monetary system, banknotes evolved to
represent credit money, or (if backed by the credit
of a government) also fiat money.
Notes or bills were often referred to in 18th
century novels and were often a key part of the plot
such as a "note drawn by Lord X for £100 which
becomes due in 3 months time"
First banknotes in the world
Song Dynasty Jiaozi, the world's earliest paper moneySee
also: List of Chinese inventions
The use of paper money as a circulating medium is intimately
related to shortages of metal for coins. In ancient China
coins were circular with a rectangular hole in the middle.
Several coins could be strung together on a rope. Merchants
in China, if they became rich enough, found that their
strings of coins were too heavy to carry around easily. To
solve this problem, coins were often left with a trustworthy
person, and the merchant was given a slip of paper recording
how much money he had with that person. If he showed the
paper to that person he could regain his money. Eventually,
the paper money called "jiaozi" originated from these
In the 7th century there were local issues of paper currency
in China and by 960 the Song Dynasty, short of copper for
striking coins, issued the first generally circulating
notes. A note is a promise to redeem later for some other
object of value, usually specie. The issue of credit notes
is often for a limited duration, and at some discount to the
promised amount later. The jiaozi nevertheless did not
replace coins during the Song Dynasty; paper money was used
alongside the coins.
The successive Yuan Dynasty was the first dynasty in China
to use paper currency as the predominant circulating medium.
The founder of the Yuan Dynasty, Kublai Khan, issued paper
money known as Chao in his reign. The original notes during
the Yuan Dynasty were restricted in area and duration as in
the Song Dynasty, but in the later course of the dynasty,
facing massive shortages of specie to fund their ruling in
China, began printing paper money without restrictions on
duration. By 1455, in an effort to rein in economic
expansion and end hyperinflation, the new Ming Dynasty ended
paper money, and closed much of Chinese trade.
In the Indian sub-continent a similar system evolved called
the hundi system. The history of these instruments has not
been widely studied but it is quite likely that these were
in common use hundreds of years ago, being designed to
assist in Indian trade, which was extensively practiced
across the world in the past. A Hundi is basically an
unconditional order in writing made by a person directing
another to pay a certain sum of money to a person named in
the order. Hundis, similar to paper notes, were issued by
indigenous bankers and used in trade and credit transactions
and to transfer funds from one place to another, a kind of
travellers cheque. They were also used as credit instruments
for borrowing and as bills of exchange for trade
Banknotes in Europe
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 bank notes.
The first proper European banknotes were issued by
Stockholms Banco, a predecessor of the Bank of Sweden, in
1660, although the bank ran out of coins to redeem its notes
in 1664 and ceased operating in that year.
Until Louis XIV, banknotes were issued by small creditors,
had limited circulation, and were not backed by the
authority of the state. Economist John Law helped establish
banknotes as formal currency, backed by capital consisting
of French government bills and government accepted notes.
Banknotes in the United States
Fifty-five dollar bill in Continental currency; leaf design
by Benjamin Franklin, 1779In the early 1690s, the
Massachusetts Bay Colony was the first of the Thirteen
Colonies to issue permanently circulating banknotes. The use
of fixed denominations and printed banknotes came into use
in the 18th century.
In the early 1700s each of the thirteen colonies issued
their own banknotes. During the American Revolutionary War,
the Continental Congress issued Continental currency to
finance the war. The federal government of the United States
did not print banknotes until 1862. However, almost
immediately after adoption of the United States Constitution
in 1789, the United States Congress chartered the First Bank
of the United States and authorized it to issue banknotes.
The bank served as quasi-central bank of the United States.
The bank closed in 1811 when Congress failed to renew its
charter. In 1816, Congress chartered the Second Bank of the
United States. When its charter expired in 1836, the bank
continued to operate under a charter granted by the
Commonwealth of Pennsylvania until 1841.
In the United States, public acceptance of banknotes in
replacement of precious metals was hastened in part by
Executive Order 6102 in 1933. This order carried the threat
of a maximum $10,000 fine and a maximum of ten years in
prison for anyone who kept more than $100 of gold in
preference to banknotes.
Issue of banknotes
Generally, a central bank or treasury is solely responsible
within a state or currency union for the issue of banknotes.
However, this is not always the case, and historically the
paper currency of countries was often handled entirely by
private banks. Thus, many different banks or institutions
may have issued banknotes in a given country. In the United
States, commercial banks were authorized to issue banknotes
from 1863 to 1935. In the last of these series, the issuing
bank would stamp its name and promise to pay, along with the
signatures of its president and cashier on a preprinted
note. By this time, the notes were standardized in
appearance and not too different from the Federal Reserve
Notes that circulated for most of the 20th century.
In a small number of countries, private banknote issue
continues to this day. For example, by virtue of the complex
constitutional setup in the United Kingdom, certain
commercial banks in two of the union's four constituent
countries (Scotland and Northern Ireland) continue to print
their own banknotes for domestic circulation, even though
they are not fiat money or declared in law as legal tender
anywhere. The UK's central bank, the Bank of England, prints
notes which are legal tender in England and Wales; these
notes are also usable as money (but not legal tender) in the
rest of the UK (see Banknotes of the pound sterling).
In Hong Kong, three commercial banks are licenced to issue
Hong Kong dollar notes. As well as commercial issuers,
other organizations may have note-issuing powers; for
example, until 2002 the Singapore dollar was issued by the
Board of Commissioners of Currency Singapore, a government
agency which was later taken over by the Monetary Authority
Materials used for banknotes
Most banknotes are made from cotton paper (see also paper)
with a weight of 80 to 90 grams per square meter. The cotton
is sometimes mixed with linen, abaca, or other textile
fibres. Generally, the paper used is different from ordinary
paper: it is much more resilient, resists wear and tear (the
average life of a banknote is two years), and also does
not contain the usual agents that make ordinary paper glow
slightly under ultraviolet light. Unlike most printing and
writing paper, banknote paper is infused with polyvinyl
alcohol or gelatin to give it extra strength. Early Chinese
banknotes were printed on paper made of mulberry bark and
this fiber is used in Japanese banknote paper today.
Most banknotes are made using the mould made process in
which a watermark and thread is incorporated during the
paper forming process. The thread is a simple looking
security component found in most banknotes. It is however
often rather complex in construction comprising fluorescent,
magnetic, metallic and micro print elements. By combining it
with watermarking technology the thread can be made to
surface periodically on one side only. This is known as
windowed thread and further increases the counterfeit
resistance of the banknote paper. This process was invented
by Portals, part of the De La Rue group in the UK. Other
related methods include watermarking to reduce the number of
corner folds by strengthening this part of the note,
coatings to reduce the accumulation of dirt on the note, and
plastic windows in the paper that make it very hard to copy.
Counterfeiting and security measures on paper banknotes
The ease with which paper money can be created, by both
legitimate authorities and counterfeiters, has led both to a
temptation in times of crisis such as war or revolution to
produce paper money which was not supported by precious
metal or other goods, thus leading to hyperinflation and a
loss of faith in the value of paper money, e.g. the
Continental Currency produced by the Continental Congress
during the American Revolution, the Assignats produced
during the French Revolution, the paper currency produced by
the Confederate States of America and the Individual States
of the Confederate States of America, the financing of World
War I by the Central Powers (by 1922 1 gold Austro-Hungarian
krone of 1914 was worth 14,400 paper Kronen), the
devaluation of the Yugoslav Dinar in the 1990s, etc.
Banknotes may also be overprinted to reflect political
changes that occur faster than new currency can be printed.
In 1988, Austria produced the 5000 Schilling banknote
(Mozart), which is the first foil application (Kinegram) to
a paper banknote in the history of banknote printing. The
application of optical features is now in common use
throughout the world.
Many countries' banknotes now have embedded holograms.
A five Australian dollar polymer banknoteMain article:
In 1983, Costa Rica and Haiti issued the first Tyvek and the
Isle of Man issued the first Bradvek polymer (or plastic)
banknotes; these were printed by the American Banknote
Company and developed by DuPont. In 1988, after significant
research and development by the Commonwealth Scientific and
Industrial Research Organisation (CSIRO) and the Reserve
Bank of Australia, Australia produced the first polymer
banknote made from biaxially-oriented polypropylene
(plastic), and in 1996 became the first country to have a
full set of circulating polymer banknotes of all
denominations. Since then, other countries to adopt
circulating polymer banknotes include Bangladesh, Brazil,
Brunei, Chile, Indonesia, Israel, Malaysia, Mexico, Nepal,
New Zealand, Papua New Guinea, Romania, Samoa, Singapore,
the Solomon Islands, Sri Lanka, Thailand, Vietnam, and
Zambia, with other countries issuing commemorative polymer
notes, including China, Kuwait, the Northern Bank of
Northern Ireland, Taiwan and Hong Kong. Other countries
indicating plans to issue polymer banknotes include Nigeria
and Canada. In 2005, Bulgaria issued the world's first
hybrid paper-polymer banknote.
Polymer banknotes were developed to improve durability and
prevent counterfeiting through incorporated security
features, such as optically variable devices that are
extremely difficult to reproduce.
Apart from Australia, other countries such as Vietnam,
Brunei, New Zealand, Papua New Guinea and Romania have all
their circulating banknotes on polymer.
Over the years, a number of materials other than paper have
been used to print banknotes. This includes various
textiles, including silk, and materials such as leather.
Silk and other fibers have been commonly used in the
manufacture of various banknote papers, intended to provide
both additional durability and security. Crane and Company
patented banknote paper with embedded silk threads in 1844
and has supplied paper to the United States Treasury since
1879. Banknotes printed on pure silk "paper" include
"emergency money" Notgeld issues from a number of German
towns in 1923 during a period of fiscal crisis and
hyperinflation. Most notoriously, Bielefeld produced a
number of silk, leather, velvet, linen and wood issues, and
although these issues were produced primarily for
collectors, rather than for circulation, they are in demand
by collectors. Banknotes printed on cloth include a number
of Communist Revolutionary issues in China from areas such
as Xinjiang, or Sinkiang, in the United Islamic Republic of
East Turkestan in 1933. Emergency money was also printed in
1902 on khaki shirt fabric during the Boer War.
Leather banknotes (or coins) were issued in a number of
sieges, as well as in other times of emergency. During the
Russian administration of Alaska, banknotes were printed on
sealskin. A number of 19th century issues are known in
Germanic and Baltic states, including the towns of Dorpat,
Pernau, Reval, Werro and Woisek. In addition to the
Bielefeld issues, other German leather Notgeld from 1923 is
known from Borna, Osterwieck, Paderborn and Pößneck.
Other issues from 1923 were printed on wood, which was also
used in Canada in 1763-1764 during Pontiac's Rebellion, and
by the Hudson's Bay Company. In 1848, in Bohemia, wooden
checkerboard pieces were used as money.
Even playing cards were used for currency in France in the
early 19th century, and in French Canada from 1685 until
1757, in the Isle of Man in the beginning of the 19th
century, and again in Germany after World War I.
Vending machines and banknotes
People are not the only economic actors who are required to
accept banknotes. In the late 20th century machines were
designed to recognize banknotes of the smaller values long
after they were designed to recognize coins distinct from
slugs. This capability has become inescapable in economies
where inflation has not been followed by introduction of
progressively larger coin denominations (such as the United
States, where several attempts to introduce dollar coins in
general circulation have largely failed). The existing
infrastructure of such machines presents one of the
difficulties in changing the design of these banknotes to
make them less counterfeitable, that is, by adding
additional features so easily discernible by people that
they would immediately reject banknotes of inferior quality,
for every machine in the country would have to be updated.
See also: Burning money
Banknotes have a limited lifetime, after which they are
collected for destruction, usually recycling or shredding. A
banknote is removed from the money supply by banks or other
financial institutions due to everyday wear and tear from
its handling. Banknote bundles are passed through a sorting
machine that determines whether a particular note needs to
be shredded, or are removed from the supply chain by a human
inspector if they are deemed unfit for continued use – for
example, if they are mutilated or torn. Counterfeit
banknotes are destroyed unless they are needed for
evidentiary or forensic purposes.
Contaminated banknotes are also decommissioned. A Canadian
government report indicates:
Types of contaminants include: notes found on a corpse,
stagnant water, contaminated by human or animal body fluids
such as urine, feces, vomit, infectious blood, fine
hazardous powders from detonated explosives, dye pack and/or
These are removed from circulation primarily to prevent the
spread of diseases.
When taken out of circulation, Australian bank notes are
melted down and mixed together to form plastic garbage bins.
Paper money is created by the devil in the 1832 Faust, Part
II, Act I, by Johann Wolfgang von Goethe, to save the
imperial finances. In The Master and Margarita, by Mikhail
Bulgakov, the devil turns paper into money, which then
reverts into paper. In both cases, the implication is that
fiat money is black magic, and but paper.
Paper money collecting as a hobby
Banknote collecting, or Notaphily, is a rapidly growing area
of numismatics. Although generally not as widespread as coin
and stamp collecting, the hobby is
increasingly expanding. Prior to the 1990s, currency
collecting was a relatively small adjunct to coin
collecting, but the practice of currency auctions, combined
with larger public awareness of paper money have caused a
boom in interest and values of rare banknotes[citation
Collectors often use a banknote catalog to find information
about their banknotes or banknotes they may be interested
For years, the mode of collecting banknotes was through a
handful of mail order dealers who issued price lists and
catalogs. In the early 1990s, it became more common for rare
notes to be sold at various coin and currency shows via
auction. The illustrated catalogs and "event nature" of the
auction practice seemed to fuel a sharp rise in overall
awareness of paper money in the numismatic community. Entire
advanced collections are often sold at one time, and to this
day single auctions can generate well in excess of $1
million in gross sales. Today, eBay has
surpassed auctions in terms of highest volume of sales of
banknotes. However, as of 2005, rare banknotes still sell
for much less than comparable rare coins. There is wide
consensus in the paper money collecting
arena that this disparity is diminishing as paper money
prices continue to rise.
There are many different organizations and societies around
the world for the hobby, including the International Bank
Note Society (IBNS).