Paper money is a printed token that stands for value without holding it — a slip whose worth rests on trust and state authority rather than on the metal in a coin. Private merchants in Song-dynasty Sichuan circulated the first such notes, the jiaozi, around the turn of the eleventh century; after several issuers failed, the Song state took over and in 1024 issued the first government-backed paper currency. The instrument detached the money supply from the weight of metal and, after centuries of inflation and abandonment in China, became the model for every banknote and every fiat currency in use today.
The Great Khan, Marco Polo reported, had mastered a kind of alchemy. In his Chinese capital, subjects handed over gold, silver, gems, and goods and took away nothing but slips of paper cut from the bark of mulberry trees, stamped with the ruler's vermilion seal. And they took them gladly, spending them across an empire as if they were coin. To a thirteenth-century Venetian raised on the honest weight of metal, this was astonishing: the Khan had found how to make treasure out of paper, and no one refused it. What Polo could not quite see was that he was looking at the maturity of an idea already three centuries old — money whose value lived not in the thing itself but in the promise printed on it.