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# Promissory Notes

## Definition

Written promises by bankers to pay a specified sum of money on demand or at a future date. These notes circulate as money when the public has confidence in the banker's ability and willingness to honour them.

## Source Chapter

Book II, Chapter 2

## Context

Smith describes how promissory notes issued by reputable bankers can circulate as money, reducing the need for gold and silver. He explains the mechanism by which these notes facilitate trade while requiring less precious metal in circulation.

## Economic Domain

Exchange

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