ABSTRACT
All forms of banknotes-whether legal tender or not-and currency notes are usually called paper money. But the quantity of paper money that is not legal tender is nowadays negligible in the more advanced countries. Legal-tender paper money may be issued in respect of and against gold or standard metal held by the issuing institution, or against only a partial or even no backing of this kind-any quantity of it so issued in excess of or without a standard metal backing being, as a rule, backed by government securities or fi rst-class bonds of some kind, and being known as the fi duciary issue. However, whenever anything-no matter how valuable and safe-other than the standard metal is used as a backing for the issue of legal-tender paper money, additional cash is created. Such additional cash will be referred to in this volume as “fi duciary paper money,” and the general term “paper money,” being usually too vague for our purpose, will be avoided.
