In the program "Historically yours" on Europe 1, the journalist David Castello-Lopes returned on Friday to the origin of banknotes, born in China to limit the losses of the Empire in a region at war, but which have ultimately led to an equally dire situation. 

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Historically yours

, journalist David Castello-Lopes looks back on the origins of an object or a concept.

On Friday, he looked at the birth of banknotes, which greatly surprised Westerners at the time before leading to the first monetary crisis in human history.

"Are you not a little amazed by the banknotes? There is a magic trick all the same: they are pieces of paper which, from the point of view of their material, are basically identical to n "Any other piece of paper. Except them, by some kind of incredible social magic, everyone agrees that they're not just paper but money."

A Chinese invention

If I go down to the bakery and give one to the baker, she will give me bread.

And if I give her more tickets, she will give me more bread.

And if I collect some more and give them to an African head of state, he will accept that I throw my radioactive waste in his natural park.

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So today we are even more amazed because it seems normal to us.

But the first Westerners who saw that, it completely stunned them.

And one of those first Westerners is Marco Polo.

This is one of the things that surprised him the most when he visited China.

The Chinese had invented banknotes for 300 years already, around the year 1000.

It's Tim Harford who tells this story.

We were therefore around the year 1000 in China, in the Sichuan region, which was then a border region often at war.

The Emperor of China was not too keen on there being large gold reserves in Sichuan.

He preferred it to be iron.

But the thing is, iron is cool but it's not overly valuable.

The start of the trust contract

So if you wanted to buy a pony, for example, you had to show up with a wheelbarrow of iron parts.

Not very practical.

And so to understand what happened, we have to imagine that in Sichuan in the year 1000, there were a number of people who had the reputation of being both reliable and solvent, a bit like Stéphane Bern today.

Merchants began to accept that these reliable people, instead of bringing a wheelbarrow of iron coins to pay for their pony, instead marked on a piece of paper what they owed them.

And these pieces of paper, these IOUs in short, began to travel from hand to hand and to be exchanged between people outside this first pony-piece of paper exchange.

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Shortly after, the Emperor of China thought the idea was great, and decided that he was now the only one who could create his scraps of paper that are used to pay.

This is the start of tickets.

These early Chinese banknotes were called jiaozi, and they could be exchanged for real gold.

The first inflation crisis

But after a while, that wasn't even the case.

That is to say, the quantity of banknotes issued was no longer indexed to wealth that the empire actually possessed.

And there, that was the door open to shit.

Because obviously the Chinese government needed money to pay for stuff.

And it's still super tempting when you need money, to just print tickets.

But then there are too many.

And this is the start of mad inflation, which makes the currency lose value.

Until she's not worth anything at all.

And that's what happened in China.

And in many other countries since.

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One of the most recent examples is Zimbabwe.

In 2008, the country experienced inflation of 231,000,000%.

So much so that there were 100 trillion Zimbabwean dollars banknotes, which only corresponded to… 30 US dollars.

But overall, states have learned over time to resist the temptation to print money.

And 1000 years later, by and large, banknotes still work.