Paper money was an invention of the Song Dynasty in China in the 11th century, nearly 20 centuries after the first metal coins were used.
In the 11th century BC, the Chinese began to use coins. Archaeologists found copper coins in a Tang dynasty tomb. Coins were cast from copper, silver, gold and other metals with a square hole in the middle to put coins together by a string. Before paper money, coins were used for buying and selling things around the world.
Because coins were heavy to carry, merchants and traders of the Song Dynasty (618-907 AD) began putting heavy coins to stores they trusted to receive paper notes. These paper notes were used instead of coins to pay for the seller. People can bring the paper note to the store to get the coin back.
At the beginning of the Song Dynasty (960-1279 CE), the government licensed prestigious stores in issuing paper notes. From the 11th AD, the Song Dynasty directly controlled the system and issued paper money. This was the first paper money issued by the government in the world.