AFGHANISTAN, 500 afghanis, 1342 SH (1963 AD)


AFGHANISTAN, KINGDOM, 500 afghanis, 1342 SH (1963 AD), Face: brown and multicolor, king’s portrait, Back: dam, P41b, AU

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Afghanistan didn’t get into paper money until the 1920s. They watched the use of paper money in British India and Iran. Gradually it dawned on them: “You mean I can just give you a piece of paper, and keep the gold? Cool.”

Aside from China, other governments started using circulating “banknotes” starting in the 17th century AD. The practice became general in the 19th century. In the 20th century value of paper money in circulation far surpassed the value of coinage. In the 21st century paper money is fading and credit transactions are growing.

Paper money, meaning the promise of a government to pay a set amount, and the paper promise allowed to circulate at will, was probably first used in China in the 12th century AD. At that time the merchants and governments of Europe were just writing letters to each other about what they owed.