How were currencies oringally introduced?

Question

I am currently trying to learn about currency and why it was introduced etc. The one aspect I do not understand is how did currency start originally? How did notes become of value and on what basis did the government issue them? Did the government get something?

Answer 1

Currency started the day the barter system was thrown out.  I think what you are asking is when did we start using Paper Money in the United States?  We'll that can be dated back to Colonial times.

Why you ask?  Because paper is easier to make and use as money when you don't have any Gold around to turn into Coins.

There are many ways to answer your question, but your question isn't focused enough to give you a good response.

Answer 2

As far as I know the Banking system was established by the Knight Templars who returned with huge proceeds from the Crusade.They offered people a safe place for depositing their wealth especially gold and they gave them a receipt-a paper /parchment piece .On it was written,'' I promise to pay the bearer on demand of the sum of gold..This receipt over time became the medium of exchange instead of real gold.This is the origin of paper currency.But before that all the primitive/tribal people  used different natural objects/metals as a medium of exchange.Before the advent of paper currency people used gold/silver/bronze etc .You still see metallic coins.

Regarding the value,the paper note has no value of its own.It is still a receipt against gold.Anyone can go to any bank with a paper note and demand gold equivalent to the government given value of that note.It is the gold reserve of the government treasury that gives value to these receipts(paper notes).And it works because people believe in the value of the note and they can use it to buy things/service.The value of paper currency also depends on the the country's economic condition.The currency value falls if the economy of that country deteriorates.That's why you see time to time change of value of dollar/pound/euro etc.For the same reason the currency value of different countries are different.