The Song dynasty first issued government-backed paper money on a large scale, aiding trade connected to the Silk Road.
China had used private merchant notes before the Song government adopted paper currency more extensively. During the 11th century, the Song state issued jiaozi and related forms of paper money, creating an important monetary innovation in world history.
Paper money was especially useful in a commercial economy because carrying large quantities of metal coins was heavy and inconvenient. State guarantees and official exchange systems helped paper notes circulate, although confidence could suffer when governments printed too much currency.
The Yuan dynasty later made paper money a central part of its monetary system under Mongol rule. That later development is sometimes confused with the Song’s earlier large-scale use. The Silk Road connected monetary systems, but paper money did not replace every local coinage or barter practice.