Jiaozi was the paper money first issued in China during the Song dynasty. It developed in Sichuan in the 10th century, where merchants used deposit certificates instead of carrying heavy strings of copper coins.
The government later took control of production, making jiaozi one of the earliest known forms of government-issued paper currency. The Song state used paper money partly because copper shortages made coinage difficult to supply across its large territory.
Jiaozi was not simply modern banknotes in every respect. Early notes could have limited circulation areas and expiration rules, and excessive issuance contributed to inflation. China continued experimenting with different paper currencies under later dynasties.
Europe began using government-backed paper money much later. The Chinese experience therefore provides an important early example of how paper could represent value in a monetary system dominated by metal coins.