The most important instrument in a bank is currency notes. The currency notes or bank notes are something that a bank deals with; it is the main business of every bank to deal with bank or currency notes. It is true indeed that in order to have a good banking awareness, you must be acquainted with the history of currency notes.
IbpsExamAdda.org.in is here to help you in this venture as we seek to provide the latest banking awareness 2015 and banking awareness PDF download to our readers. Sit back, grab a cup of coffee and let us take you back in time where bank notes emerged.
Banking Awareness: History of currency notes
Paper currency first developed in Tang Dynasty of China during the 7th century. However, true paper money appeared in 11th century during the Song dynasty. Later on, paper money was being used throughout the Mongol Empire. European explorers like Marco Polo and William of Rubruck introduced the concept of currency notes in 13th century. It was napoleon who issued paper banknotes or currency notes in the early 1800s. Paper money was initiated in two forms, the first one being “drafts” which are receipts for a particular value held on an account and the other one being “bills” which were issued as a promise to be converted into money at a later date.
It is true that the way we perceive banknotes as money today, this perception has evolved over time as earlier bank notes were seen in the form of a mere promissory note to pay someone in precious metals. Gradually people realized the convenience and importance of these notes and the element of precious metals was removed from the monetary system and bank notes came to represent fiat money or credit money.
Paper currency, made its first appearance in 17th century in Europe as in 1656 Johan Palmstruch established the Stockholm Banco which was a private bank having strong links with the state. It was in 1661 that Palmstruch issued credit note which could be exchanged for silver coins after depositing them at the bank. Gradually, these notes came to be used for buying and selling goods as both the parties began trusting that these notes could be exchanged in the bank in exchange for silver coins. Unfortunately, Palmstruch ended up issuing more notes than his bank could afford and ultimately faced a death penalty. After half a century there was another experiment with currency notes which again ended up in turmoil.
The first effort to issue permanent bank notes was made by the bank of England. It was established in 1694 in order to raise money for funding of war against France and so the bank notes were issued with the promise to pay the bearer the value of the note on demand. These notes were initially handwritten with a precise amount and were issued as a loan. Finally, there was a slow move towards issuing fixed denominations notes and by 1745 standardized printing notes which ranged from £20 to £1,000 were being printed. The federal government of the United States began to print bank notes in 1862.
About Indian Currency Notes
In case of India, the reserve bank of India was formally inaugurated on April 1, 1935 and issued the first five rupee note in 1938 which had the portrait of George VI on it. After independence on India, it was felt that the new notes should have the portrait of Mahatma Gandhi, however at that time the Lion Capital of Ashoka was chosen to be printed. It was in 1996 that the Mahatma Gandhi series of notes was introduced along with new prominent features such as changed watermark and latent image.
How are currency notes printed?
The currency notes were initially printed by the commercial banks. Gradually in most of the countries only the central bank of the country was given the authority to print currency notes. However, there are still a small number of countries where the currency notes are printed by private banks. In India, the currency notes are printed by the RBI and each note has the signature of the governor of RBI.
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To know about the responsibilities of the governor of RBI Click here.
We hope this brief history of notes helped you in enhancing your banking awareness, All the very best readers!