The Tang Dynasty was a transformational moment in China. A wide variety of cultural and economic areas flourished during this time, and it launched China into a position to compete with the silk-road-enriched inner Asians.
One area that which underwent such a transformation was that of banking. At the time, China issued copper coins which had holes in them. The hole wasn’t an aesthetic feature, but rather an easy way to transport large quantities of coins to use in trade. All merchants had to do was measure the string of coins to determine a fair trade had been made.
Inconvenience Breeds Innovation
There were some very inconvenient realities about carrying strands of copper coins around, they’re heavy, difficult to discreetly transport, and hard to store.
During the Tang Dynasty merchants would leave their coins with trustworthy individuals. To track this money these trustworthy “bankers” would issue a paper certificate validating how much money was being stored. Over time, people began to trade the certificates rather than trading the coins themselves. Not only was the certificate more convenient, but it also kept the coins safely stored. This practice gained so much popularity that by the year 812 the Chinese government took over the issuing of paper bank drafts. I’m sure back then that there were people saying. “I don’t like the bank because I don’t want my money in someone else’s hands.”
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