-> bank note
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- Bank notes are promissory notes paid to bearers on demand. They are made by banks and represent fiat money or money with value, which is created under government law or regulation. Originally, coins were produced from semi-precious and precious metals and served to settle trades. Bank notes are an alternative to coins and their use involves some advantages and disadvantages. For example, the wear costs of bank notes are low – they can be used as a payment instrument even if in poor condition. Banks still have to replace banknotes and they wear out quicker than coins. In addition, bank notes are printed on polymer or paper, and their cost is lower than coins, which are produced from semi-precious metals. Finally, it costs less to transport bank notes, compared to coins, because they are lighter.
Millions of financial transactions around the globe involve bank notes. They are regarded as legal tender and are money or currency. The US Federal Reserve regulates how much currency is created and distributed in the country by the Bureau of Printing and Engraving. The Federal Reserve issues bank notes, and they carry emblems to indicate that. Bank notes have clearly printed values as well as security features to minimize the risk of forging. The central banks of other nations also issue bank notes.
Some people are interested in historic examples of bank notes and collect them. This branch of numismatics studies currency, money, and financial systems in general. Sometimes, bank notes do not function as money and legal currency, but they have numismatic value. Confederate bank notes were printed during the American Civil War, for instance. They are not in circulation, but are an object of interest and have monetary value. Similar to paper money, some people also have collections of antique coins.
Different materials have been used to issue bank notes over the years, including paper, leather, and silk. Silk provides additional security and durability and is used in the manufacturing of different bank notes. Leather notes had been issued in times of emergency such as sieges. For example, they were produced from sealskin under the Russian administration of Alaska. France and French Canada used playing cards as money in the 19th and 17th – 18th century respectively. Germany, after the First World War, and the Isle of Man also used playing cards as currency. Canada printed bank notes on wood in the period 1763 – 1764 while checkerboard pieces served as currency in Bohemia in 1848.
Bank notes are also called bills and notes. Depending on the region or country of origin, bank notes differ, but all have a monetary value. One issue with bank notes is that they are easier to forge. If you are given a note and suspect it is a counterfeit, you should bring it to the police. The note will be sent for analysis. Bear in mind that a counterfeit bank note is worthless, and you should not pass or hold it. This is a criminal offence.
The lifetime of bank notes is limited, and states collect them for destruction, typically through shredding or recycling. Financial institutions such as banks remove bank notes from the money supply after some time because of wear and tear. Human inspectors check whether notes are torn, mutilated, and unfit for further use. Alternatively, sorting machines can be used to determine whether bank notes need to be removed and shredded. Counterfeit notes are also destroyed unless forensic or evidentiary purposes require a counterfeit to be held. Contaminated banknotes are also removed from circulation in order to prevent the spread of infections and diseases.