About Paper Currency
Paper currency is used by countries around the world. According to the Federal Reserve Bank of San Francisco, the Massachusetts Bay Colony was the first to issue paper money in 1690 in what would later become the United States. The United States Department of the Treasury states that each Federal Reserve bank must hold collateral equal to the value of the money it issues. The value of a nation's currency varies from one country to another at different times, based on the economy.
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History
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Paper currency was first printed in China during the Tang dynasty. Europe later used this idea to begin printing paper money in Sweden in 1601 and paper currency was backed by gold in 1816 in England. The United States passed the Gold Standard Act in 1900 and the Federal Reserve System regulated the flow of currency in the U.S. The Great Depression of the 1930s ended the gold standards in the U.S. and Europe.
Types
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The types of paper money in circulation vary by country. China issues the jiao and the yuan in 11 total denominations. According to the Bank of England, English banknotes are issued in 5-, 10-, 20- and 50-pound denominations. The United States uses the dollar, and issues 7 denominations for public circulation. The official currency of member countries of the European Union is the euro, which was introduced in January, 1999.
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Identification
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Paper currency contains features to identify each country's money. Paper money in the United States features pictures of past presidents on the front and national monuments on the back. It is also marked with the words, "In God We Trust." Euro banknotes show the architectural styles of European history and have "Euro" printed on the front and back. The British pound says "Bank of England" on both sides and features pictures of famous English figures on the back.
Counterfeiting
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The counterfeiting of currency has been practiced for hundreds of years. According to the United States Secret Service, counterfeiting of paper money in early historical periods was considered to be treason and was punishable by death. U.S.. paper currency carries a watermark and micro-printing, as well as red and blue threads embedded in the paper to reduce counterfeiting. The euro has a raised feel to the printing, a watermark, security thread, a hologram image and micro-printing.
Exchange
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Those who travel abroad may have to exchange currency. Two factors involved in money exchange are the exchange rate and the commission fee. Exchange rates affect the value of currency. This includes using a credit or debit card. However, no commission fee is charged when obtaining a cash advance with a credit card or withdrawing money at an ATM. Traveler's checks may have to be exchanged for paper currency in some countries.
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