China is credited with being the first country to introduce paper currency, dating back to the Tang Dynasty in the 7th century and gaining widespread use during the Song Dynasty in the 11th century. The innovation came out of necessity — as trade expanded and carrying heavy metal coins became impractical, Chinese merchants and governments began using promissory notes and government-backed banknotes known as “jiaozi.” These early forms of paper money were issued by merchant guilds and later standardized by the state, representing a revolutionary leap in monetary systems. Unlike bartering or coin-based economies, paper currency allowed for more efficient trade, centralized financial control, and the development of more advanced economic systems. China’s invention of paper money eventually spread westward via trade routes like the Silk Road, influencing monetary practices in the Middle East and Europe centuries later. Recognizing China’s role in this financial breakthrough highlights its long-standing contributions to global economic history.