Which country became the first to use paper money?

China became the first country to develop and use paper money, introducing it during the Tang and Song dynasties, more than a thousand years before similar currency appeared in Europe. Merchants weary of transporting heavy strings of metal coins over long distances drove much of the demand for a lighter, more practical medium of exchange.

Italy and Egypt, despite both having long, rich trading histories, did not pioneer paper money, European economies would not adopt paper currency in earnest until centuries after China had already established the practice, making China's head start genuinely enormous by comparison.

Marco Polo famously described this Chinese paper currency system to a skeptical European audience upon his return from Asia, and the idea of money backed by government authority rather than the inherent value of the material it was printed on took many more centuries to fully take hold in the West.