After the collapse of Rome, Europe was wrapped in chaos till the end of ruling of Charles the Great, who was considered to be the father of European union, a king ruling for over than 40 years since 771.
Charles the Great introduced, among others reforms, silver currency system around the year 800. A three-step system was introduced: pound, solid and dinar were introduced: 1 pound= 20 solids= 240 dinars.
This system introduced by Charles the Great was used until the turn of XII/XIII century. Creating and introducing paper money caused the development of clearance money. Clearance money didn’t exist in a physical sense and they were only a kind of conventional money used in accounting.
This feature prevented “breaking” it, a practice that usually concerned metal coins. It was clearance money that caused the stabilization of the monetary system in the times of creation of the first bank of issue.
Notes quickly became popular in Europe with the first notes appearing in Europe in 1661 in Stockholm. Seven years later the first bank of issue – Severigs Riskbank – was created and 26 years after it the Bank of England was established. Notably, however, in China paper money was used much earlier.