Which country was the first to use paper money?

China was the first country to use paper money.

Chinese merchants and governments developed paper-like forms of payment after metal coins became inconvenient to transport over long distances. During the Song dynasty, authorities issued official banknotes known as jiaozi, especially in the eleventh century.

Paper money later became more widespread under the Yuan dynasty. The Venetian traveler Marco Polo described Chinese government-issued paper currency in his account of Kublai Khan’s empire, introducing the idea to many European readers.

China’s early notes were backed by government authority and rules governing acceptance and redemption. Paper money did not replace coins everywhere immediately, and its success depended on trust, regulation, and the issuing government’s ability to control supply.