History first European paper money

In Europe, the best conditions for paper money introduction were in North Italy. Here, a developed banking and credit system already functioned in the 12th century. It allowed one to avoid difficult and dangerous transfers of large amounts of coins by means of handwritten quittances given for coins deposited in the banking houses.

A similar situation was in England where similar quittances, the goldsmiths' notes so-called, were given by goldsmiths for deposited gold. These quittances were used as money. So, the English goldsmiths become "via facti" the first bankers in England and precipitated the foundation of the Bank of England.

The great economic crisis of 1720 caused by the paper money introduction in France in 1716 by John Law, who first recognised that banknote circulation need not be necessarily fully covered by a noble metal, discouraged other European rulers to follow the Swedish and English examples. This crisis (or better said "childhood illness" of paper money) was caused by the lack of experience in regulation of paper money circulation and, to a considerable degree, by the insufficient maturity of French society of that time. However, irrespective of this, a great wave of paper money introduction started in Europe and North America as late as in the mid 18th century. In order to increase the credit of paper money and to prevent the population's hesitance and/or reluctance to accept it due to memory of the John Law crisis, some rulers, e.g.

Maria Theresia of Austria ordered that private persons were not obliged to accept paper money. On the contrary, the state institutions were obliged to accept it and, in addition, a part of taxes was to be paid in paper money.

Unfortunately, paper money introduction and an auspicious development were followed by the Great French Revolution and the subsequent Napoleonic expansion. This exhausted the economy of many European countries and gradually led their currencies to collapse. In that period, the first great waves of politically motivated paper money counterfeiting also occurred - England counterfeited the French money while France - the Austrian and Russian money.

Counterfeit of French assignate of 50-livres, probably of English origin, detected and counter-signed by a contemporary expert.


Hand signed genuine Russian assignate of 25 rubles from early 19. century (left) and a Napoleonic counterfeit differing by printed signatures and letters Л mistaken, substituted for Д in the word ХОДЯЧЕЮ, see detail.

Source:The Security Features Guide