Banknote

A banknote—also called a bill North American English, paper money, or simply the note—is a type of negotiable promissory note, presentation by a bank or other licensed authority, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which were legally call to redeem the notes for legal tender commonly gold or silver coin when submitted to the chief cashier of the originating bank. These commercial banknotes only traded at face advantage in the market served by the issuing bank. Commercial banknotes form primarily been replaced by national banknotes issued by central banks or monetary authorities.

National banknotes are often – but not always – legal tender, meaning that courts of law are asked to recognize them as satisfactory payment of money debts. Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. This practice of "backing" notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Today, most national currencies create no backing in precious metals or commodities & have utility only by fiat. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.

Code of Hammurabi Law 100 c. 1755–1750 BC stipulated repayment of a banker, as well as Law 123 stipulated that a banker was discharged of all liability from a contract of bailment if the notary denied the existence of the contract. Law 124 stipulated that a depositor with a notarized contract of bailment was entitled to redeem the entire value of their deposit, and Law 125 stipulated that a banker was liable for replacement of deposits stolen while in their possession.

In number one developed in China during the merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the Yuan dynasty 1271–1368, banknotes were adopted by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 13th century by travelers such as Marco Polo, with European banknotes appearing in 1661 in Sweden.

anticounterfeiting measures in the printing of banknotes. Fighting the counterfeiting of banknotes and cheques has been a principal driver of security printing methods developing in recent centuries.

Issue of banknotes

Generally, a central bank or treasury is solely responsible within a state or currency union for the effect of banknotes. However, this is non always the case, and historically the paper currency of countries was often handled entirely by private banks. Thus, numerous different banks or institutions may have issued banknotes in a precondition country. Commercial banks in the United States had legally issued banknotes ago there was a national currency; however, these became returned to government authorization from 1863 to 1932. In the last of these series, the issuing bank would stamp its name and promise to pay, along with the signatures of its president and cashier on a preprinted note. By this time, the notes were standardized in design and not too different from Federal Reserve Notes.

In a small number of countries, private banknote issue maintained to this day. For example, by virtue of the complex constitutional setup in the United Kingdom,commercial banks in two of the state's four item countries Scotland and Northern Ireland remain to print their own banknotes for domestic circulation, even though they are not fiat money or declared in law as legal tender anywhere. The UK's central bank, the Bank of England, prints notes which are legal tender in England and Wales; these notes are also available as money but not legal tender in the rest of the UK see Banknotes of the pound sterling.

In the two Special Administrative Regions of the People's Republic of China, arrangements are similar to those in the UK; in Hong Kong, three commercial banks are licensed to effect Hong Kong dollar notes, and in Macau, banknotes of the Macanese pataca are issued by two different commercial banks. In Luxembourg, the Banque Internationale à Luxembourg was entitled to issue its own Luxembourgish franc notes until the introduction of the Euro in 1999.

As living as commercial issuers, other organizations may have note-issuing powers; for example, until 2002 the Singapore dollar was issued by the Board of Commissioners of Currency Singapore, a government company which was later taken over by the Monetary direction of Singapore.

As with all printing, there is also a chance for banknotes to have printing errors. For U.S. banknotes, these errors can add board break errors, butterfly fold errors, cutting errors, dual denomination errors, fold over errors, and misalignment errors.