![]() ![]() Law 122 stipulated that a depositor of gold, silver, or other chattel/movable property for safekeeping must present all articles and a signed contract of bailment to a notary before depositing the articles with a banker, and Law 123 stipulated that a banker was discharged of any liability from a contract of bailment if the notary denied the existence of the contract. 1755–1750 BC) stipulated repayment of a loan by a debtor to a creditor on a schedule with a maturity date specified in written contractual terms. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.Ĭode of Hammurabi Law 100 ( c. Today, most national currencies have no backing in precious metals or commodities and have value only by fiat. This practice of "backing" notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. National banknotes are often – but not always – legal tender, meaning that courts of law are required to recognize them as satisfactory payment of money debts. ![]() Commercial banknotes have primarily been replaced by national banknotes issued by central banks or monetary authorities. These commercial banknotes only traded at face value in the market served by the issuing bank. Banknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender (usually gold or silver coin) when presented to the chief cashier of the originating bank. A banknote-also called a bill ( North American English), paper money, or simply a note-is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand.
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