The first paper money was issued in China during the Song dynasty in the 10th century. The name of the note was jiao zi. For the first time it was issued liberally among the people of China. Thus it was able to take the place of coins that till then were widely used in circulation. After its decline the jiao zi could not be used for trading. Such situation led to social chaos. The government of Song decided to establish an office in Chengdu in 1023. The goal was to handle the introduction of jiao zi. The following year stately paper money was introduced.

When the paper money was introduced, its face value was written. Some time later the face value was printed and 2 official seals were included in order to avoid counterfeiting. In addition, the government prohibited any issuance of private notes. Newly printed paper money, were issued at the end of each period, one period lasting two years. After the extension of one issuance term to 2 terms and the doubling of issued paper money, jiao zi depreciated.

Paper money appeared in China due to several reasons. Firstly, after a great development of the economy and a boom in trade registered in the Northern Song Dynasty, the iron coin sometimes showed its disadvantages, mainly due to the fact that it was small in value and heavy. In addition, during this period, printing showed great results, it was able to produce paper money, which was quite convenient for traders.

Besides jiao zi, Chinese government issued such paper money as: qian yin, xiao chao, guan zi, gong ju, hui zi, and so on. Among them all jiao zi registered the longest time of circulation and hui zi had the largest circulation. Jiao zi, chao yin, and xiao chao were issued during the period of the Northern Song Dynasty, while guan zi, gong ju, and hui zi were printed during the period of the Southern Song Dynasty, which ruled between 1127 and 1279.