The expansion of the European trade zone made way for the emergence of trade bills of exchange, and this happened around the end of the Middle Ages. This expanded because of the growing Italian wholesale trade on such commodities as woolen clothing, cloth, tin, wine, and other products. These
merchants depend on this for the growing business . The arrangement made it possible for goods to be transacted based on the bill of exchange. This means that the buyer enters a promise to make the payment on an agreed date. The arrangement works on the premise that the buyer is credible or that such a buyer gets a credible guarantor. The bill would be presented before a merchant banker who would make that payment on the discounted note before the due date. This method is to help travelers and buyers who usually travel to longer places to make a purchase. There is a danger when they travel with huge sums of money with them. Cash would be deposited with a banker in a town, and the redemption would be done with another banker in another town. With time this becomes a method of payments, and the system becomes widely accepted not only in Europe but also in other parts of the world.
When it started, it was widely used as a currency because it served as a medium of exchange as well as storage of value. The credit system now becomes a way of creating new money for the system. It becomes a prominent form of trade in the last quarter of the 18th century in places like England. This was replaced by banknotes, cash credit, as well as checks, which were widely available at this time in Europe and many other parts of the world.
Around the 1500s, banking institutions developed, and currency deposits started. Receipts were received in exchange for any deposited money. The receipts were made to the person who made that deposits and the money would be withdrawn when he presents the receipts. Even if another person presents that receipt, the money would be withdrawn.
The national currency started first in Sweden as the country became the first to issue state currencies in Europe. This happened around 1661, while England started the same in the year 1694. Pounds was introduced in England right from the time of King Offa in the Middle Ages. The largest quantities that were issued then were fifty pounds, and because it was higher than what most people could earn at that time, people resorted to coin, which was more affordable.