sometime around 1100 b.c.the chinese moved from using acthual tools and weapons as a medium of exchange to using minature replicas of the same tools cast in bronze. nobody wants to reach into their pocket and cut their hand on a sharp arrow so,over time,these tiny tools and weapons were abandones for the more logical shape of a circle,which became first coins. europeans where still using coins all the way up to the year 1600, but eventually banks started using bank notes for people to carry around instead of coins. these notes could be taken to the bank at any time and exchanged for their face values in silver or gold coins. this paper money could be used to buy goods and operated much like paper money today, but it was issued by banks and private institutions, not the goverment, which is now responisble for issunig curreney in most countries.