What is a 'Banknote'

A banknote is a negotiable promissory note issued by a bank and payable to the bearer on demand. The amount payable is stated on the face of the note. Banknotes are considered legal tender, and, along with coins, make up the bearer forms of all modern money.

Also known as a "bill" or a "note."

BREAKING DOWN 'Banknote'

Originally, objects such as gold and silver were used to pay for goods and services. Eventually, they were replaced by paper money and coins that were backed by precious metals.

Currently, banknotes are backed only by the government. Although in earlier times commercial banks could issue banknotes, the Federal Reserve Bank is now the only bank in the United States that can create banknotes.

RELATED TERMS
  1. Bearer Form

    A security not registered in the issuing corporation's books ...
  2. Bearer Share

    An equity security that is wholly owned by whoever holds the ...
  3. Order Paper

    1. An order paper is a negotiable instrument that is payable ...
  4. Bills Payable

    Similar to accounts payable, this term is used to describe a ...
  5. French Franc - F

    A currency used in France, prior to the introduction of the euro. ...
  6. Pay To Bearer

    Any check or draft that can be transferred to the holder by delivery ...
Related Articles
  1. Investing

    Understanding the History of Money

    Money has been a part of human history for at least 3,000 years, evolving from bartering to banknotes.
  2. Investing

    Calculating the Accounts Payable Turnover Ratio

    The accounts payable turnover ratio measures the speed at which a company pays its suppliers.
  3. Tech

    New Counterfeit-Proof £1 introduced by the British Royal Mint

    Dubbed "the most secure coin in the world", the new British £1 coin entered circulation March 28.
  4. Insights

    Giant Gold Coin Stolen From German Museum

    The 221-pound coin would be worth close to $4.5 million at current gold prices.
  5. Investing

    Why Are People Hoarding Coins?

    Meet the new class of investor: the coin hoarder.
  6. Trading

    Top 6 Most Tradable Currencies

    Here are six currencies that can diversify your portfolio.
  7. Personal Finance

    The Evolution of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  8. Trading

    History Of Coinage In The U.S.

    From the barter system to commemorative coins, we look at the history of U.S. money.
RELATED FAQS
  1. Are accounts payable an expense?

    Learn about how to differentiate between liability accounts and expense accounts, and see why accounts payable is considered ... Read Answer >>
  2. What is the difference between a bill of exchange and a promissory note?

    Learn what bills of exchange and promissory notes are, along with notation of the primary differences between these two documents. Read Answer >>
  3. Are accounts payable counted as revenue?

    See how accounts payable is treated on the balance sheet, and why it is considered an expense and liability rather than revenue ... Read Answer >>
  4. How are accounts payable listed on a company's balance sheet?

    Find out how accounts payable is listed on a company's balance sheet, why it is considered a current liability, and how it ... Read Answer >>
  5. What are the different kinds of shares that a Public Limited Company (PLC) can issue?

    Learn what a public limited company is, and understand all of the various types of stock shares offered by public limited ... Read Answer >>
  6. How are Net Credit Purchases calculated in the accounts payable turnover ratio?

    Find out how to calculate a company's net credit purchases, the figure that makes up the numerator in the accounts payable ... Read Answer >>
Trading Center