Paper currency isn’t actually a modern invention. In fact, paper currency was first developed in 7th century China during the Tang dynasty.
Part 2. History of central banking
While England went forward with its implementation of a central bank, many of America’s founding fathers saw central banking as a bad thing.
Through a combination of mismanagement and outright sabotage, none of the country’s earliest banks stood a chance. So what was next?
Bankers felt it was crucial to have a central bank that provided stability and emergency credit as needed. European states, for example, could expand the supply of money when banks were starting to have low cash reserves, and vice versa. The US did not have such a system.
A central bank is considered a government agency and is the crux of a nation’s financial system. Almost all countries now have a central bank.