China was using paper money while much of the world was still conducting business with metal coins.

The idea grew out of a practical problem. During the Tang dynasty (618–907), Chinese merchants conducting large transactions had to transport strings of copper coins, which were heavy and cumbersome. Some began leaving their coins with merchants and using paper receipts representing the money they had deposited.

The practice developed further under the Song dynasty (960–1279). In the early 11th century, merchants in Sichuan issued paper notes known as jiaozi. The government eventually took control of their production, creating what is generally considered the world's first government-issued paper currency.

Paper money represented a significant conceptual leap. The paper itself had little intrinsic value. It worked because people trusted that it would be accepted in exchange for goods and could ultimately be redeemed or honored by the issuing authority.

Centuries later, the Venetian merchant and traveler Marco Polo arrived in China and was fascinated by Kublai Khan's paper currency. Coming from Venice, one of Europe's great commercial centers, Polo was accustomed to sophisticated trade and finance, yet he had never encountered money quite like this. He described how notes made from material derived from mulberry trees circulated throughout the Mongol empire and were accepted for goods and payments.

Europe would not begin issuing banknotes on a comparable basis until centuries later.

China hadn't simply found a lighter alternative to carrying strings of coins. It had pioneered an idea at the heart of modern finance: money can have value because people collectively trust that it does.