Today, we reach the concluding part of our investigation of the history of the Jiaozi money – the earliest paper currency in the world.
The Jiaozi was a form of banknote that appeared around the 10th century in the Sichuan capital of Chengdu. Most experts regard it as the first paper money in the world. Originally, jiaozi money was introduced as an alternative to the heavy and inconvenient metal coins. Eventually, the issuance of jiaozi was taken over by a group of wealthy businessmen, but when they became unable to honour their commitments, there was an outbreak of social unrest. In 1023, the Song government responded to the problem by setting up an office in Chengdu to take responsibility for issuing jiaozi. The following year, the private issuance of jiaozi was banned.
After Jiaozi began to circulate in Sichuan during the reign of Emperor Renzong of Northern Song, it soon became evident that something needed to be done to prevent counterfeiting. The answer was to stamp the notes with two official seals.
The term of a jiaozi issue lasted two years; new notes would be issued at the end of each term. Later, the period of an issue was extended to two terms and the size of the issue doubled. However, this led to a depreciation in value.
The emergence of jiaozi at the time of the Northern Song Dynasty, predated the appearance of paper money in western countries by almost 600 years. Although the new currency was initially welcomed among merchants and ordinary citizens, official neglect of proper laws and rules to govern its circulation, ultimately led to its devaluation and decline. Still, jiaozi occupy a very important place in the history of money.