During the Tang and Song dynasties, China revolutionized the economy by inventing paper money. Originally backed by gold or silk, this innovation made trade more efficient across vast distances. By the 11th century, the Song government issued the worlds first official banknotes.
When Marco Polo visited China centuries later, he was astonished by a system where paper held value by decree. This conceptfiat currencywas later adopted worldwide, transforming economies from barter-based systems into trust-based monetary systems that define modern finance.