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[[File:Qingpapermoney.JPG|right|thumb|320px|An item of paper money from the [[Qing Dynasty]], c. 1850-1864.]]

[[File:Qingpapermoney.JPG|right|thumb|320px|An item of paper money from the [[Qing Dynasty]], c. 1850-1864.]]

Paper money was produced as early as the beginning of the 11th century, and though initially produced independently by [[Sichuan province]] merchants, the production of paper money (交子, ''jiaozi'') was taken over by the court in [[1024]]. It continued to circulate chiefly in Sichuan until the [[Southern Song Dynasty]], when it became more standard. In [[1161]], the Southern Song court issued a new type of paper money, called ''huizi'' 會子, for circulation in the [[Jiangnan]] region around [[Suzhou]] and [[Hangzhou]]. Backed by silver by the court, the ''huizi'' were originally intended as a temporary measure, but by [[1170]] became a permanent feature of the economic landscape. The ''huizi'' originally issued expired after three years, with the intention that people would exchange them with government offices for new issues; this discouraged saving, and encouraged the use of the bills only as a mode of exchange. However, by the 1230s, prices came increasingly to be marked in amounts of ''huizi'', rather than in coin, and after [[1240]], the court ceased placing an expiration on the value of the bills. By this time, paper and silver had become the standard modes of exchange, and bronze coins fell nearly out of use, comprising less than two percent of the currency disbursed in redemption of old ''huizi''. Still, these ''huizi'' notes remained in use chiefly in the Jiangnan region, while three other sets of currency became or remained standard in other regions, respectively.<ref>von Glahn, 251-254.</ref>

Paper money was produced as early as the beginning of the 11th century, and though initially produced independently by [[Sichuan province]] merchants, the production of paper money (交子, ''jiaozi'') was taken over by the court in [[1024]]. It continued to circulate chiefly in Sichuan until the [[Southern Song Dynasty]], when it became more standard. In [[1161]], the Southern Song court issued a new type of paper money, called ''huizi'' 會子, for circulation in the [[Jiangnan]] region around [[Suzhou]] and [[Hangzhou]]. Backed by silver by the court, the ''huizi'' were originally intended as a temporary measure, but by [[1170]] became a permanent feature of the economic landscape. The ''huizi'' originally issued expired after three years, with the intention that people would exchange them with government offices for new issues; this discouraged saving, and encouraged the use of the bills only as a mode of exchange. However, by the 1230s, prices came increasingly to be marked in amounts of ''huizi'', rather than in coin, and after [[1240]], the court ceased placing an expiration on the value of the bills. By this time, paper and silver had become the standard modes of exchange, and bronze coins fell nearly out of use, comprising less than two percent of the currency disbursed in redemption of old ''huizi''. Still, these ''huizi'' notes remained in use chiefly in the Jiangnan region, while three other sets of currency became or remained standard in other regions, respectively.<ref>von Glahn, 251-254.</ref>

Paper money continued to be in wide use until the 15th century, when the Court discontinued its production. From then until the early 20th century (with a few exceptions), paper money was not governmentally produced. However, in the 18th-19th centuries, private merchants widely used various forms of paper credit, or paper receipts for gold or silver, a system not entirely dissimilar to that employed by [[rice brokers]] in Japan. Though initially functioning merely as representative of actual gold or silver in the bank, for which such a receipt or note could be exchanged, this paper money quickly came to be given and accepted as representative of value in and of itself; with people less frequently trading in their notes for precious metals, money handlers found they could issue notes and not necessarily have to hold onto the full amount of gold or silver in their store. In the 19th century, as much as one-third of money in circulation might have been paper money. Counterfeiting and the like sometimes led to runs on the banks, however, which would then lead to banks going bankrupt, as they were not holding enough gold or silver to pay out to everyone who wished to trade in a note.

Paper money continued to be in wide use until the 15th century, when the Court discontinued its production. From then until the early 20th century (with a few exceptions), paper money was not governmentally produced. However, in the 18th-19th centuries, private merchants widely used various forms of paper credit, or paper receipts for gold or silver, a system not entirely dissimilar to that employed by [[rice brokers]] in Japan. Though initially functioning merely as representative of actual gold or silver in the bank, for which such a receipt or note could be exchanged, this paper money quickly came to be given and accepted as representative of value in and of itself; with people less frequently trading in their notes for precious metals, money handlers found they could issue notes and not necessarily have to hold onto the full amount of gold or silver in their store. In the 19th century, as much as one-third of money in circulation might have been paper money. Counterfeiting and the like sometimes led to runs on the banks, however, which would then lead to banks going bankrupt, as they were not holding enough gold or silver to pay out to everyone who wished to trade in a note.