Money is a medium of exchange that can only exist in a governed society.
A type of currency slowly developed over the centuries that involved easily traded items like animal skins, salt, and weapons. These traded
goods served as the medium of exchange even though the value of each of these items was still negotiable in many cases. This system of trading spread across the world and still survives today in some parts of the globe.
One of the greatest achievements of the introduction of money was the increased speed at which business, whether it involved mammoth
slaying or monument-building, could be done.
First coins were minted in Guanzhuang in Henan Province, China around 640 BCE. Money is a medium of exchange that can only exist
in a governed society.
Meanwhile, further west during this era, in 600 BCE, the invention of metal coinage occurred when Lydia's King Alyattes – Lydian Stater was born. Lydian Stater helped the country increase both its internal and external trading systems, making it one of the richest empires in Asia Minor.
Once the Chinese had started making comparatively inexpensive paper from natural fibres, and invented block-printing, paper money came into use in the country.
Parts of Europe still used metal coins as their sole form of currency until the 16th century. Colonial acquisitions provided new sources of precious
metals and enabled European nations to keep minting a greater quantity of coins.
But banks eventually started using paper banknotes for depositors and borrowers to carry around in place of metal coins. These notes could
be taken to the bank at any time and exchanged for their face value in metal, usually silver or gold, coins.
In the beginning paper money was issued by banks or other private institutions rather than the government, which is now responsible for issuing currency in most countries.
The shift to paper money in Europe increased the amount of international trade. Banks and the ruling classes started buying currencies from other nations and created the first currency market. The
stability of a particular monarchy or government affected the value of the country's currency, and thus, that country's ability to trade on an
increasingly international currency market.