742 B
742 B
Paper Money
Definition
Promissory notes issued by banks and bankers that serve as a substitute for gold and silver money in circulation. These notes are accepted as currency because of confidence that they can be exchanged for metal money on demand.
Source Chapter
Book II, Chapter 2
Context
Smith discusses paper money as a less expensive instrument of commerce that can replace gold and silver in circulation. He explains how paper money can reduce the expense of maintaining a country's circulating medium while still facilitating the same quantity of exchanges.
Economic Domain
Exchange