During the ninth century, merchants in China began using paper certificates known as 'flying cash' to avoid the physical burden and security risks of transporting heavy copper coinage across long distances. Although these early private certificates were not legal tender and functioned primarily as credit transfer vouchers between regional trading firms, their convenience led the Song dynasty government to establish an official state monopoly on paper banknote issuance by the early eleventh century. The government backed these official notes with fixed reserves of silk, silver, and copper, thereby stabilizing regional commerce, though subsequent administrations eventually issued currency without sufficient reserve backing, resulting in localized inflationary pressures.
Based on the passage, which of the following statements are supported by the text? (Select all that apply.)
- The initial emergence of paper currency certificates was motivated by the practical difficulties of transporting metallic coinage.Answer
- BPrivate mercantile houses continued to legally issue their own paper certificates alongside the Song dynasty government's official currency.
- The official paper currency issued in the early eleventh century was backed by material commodities in addition to metallic reserves.Answer
- DNinth-century 'flying cash' certificates caused widespread inflation across China due to a lack of central government oversight.
- EThe Song dynasty was the first civilization in world history to establish a standardized system of legal tender.