The 11th-century Song Dynasty in China pioneered the world's first paper currency, known as jiaozi. This innovation arose from a shortage of bronze coins and a growing economy.

At least gold glitters. Long before the first paper banknotes fluttered through the financial houses of Europe, the bustling markets of 11th century China birthed an unprecedented financial “innovation”: the use of paper currency. In the 1020s, burdened by the shortage of bronze coins and a rapidly expanding economy, merchants in the southwestern province of Sichuan began issuing paper promissory notes. This marked the genesis of jiaozi, the world’s earliest paper money. Soon, with the imperial....