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 A Review of the Modern Banknotes:

A banknote (often known as a bill, paper money or simply a note) is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. Along with coins, Paper Money make up the cash or bearer forms of all modern fiat money. With the exception of non-circulating high-value or precious metal commemorative issues, coins are used for lower valued monetary units, while Paper money are used for higher values. However some coins may have a significant value depending on the condition and worth.
Most Banknotes are made from cotton paper ,with a weight of 80 to 90 grams per square meter. The cotton is sometimes mixed with linen, abaca, or other textile fibres. Generally, the paper used is different from ordinary paper: it is much more resilient, resists wear and tear (the average life of a banknote is two years), and also does not contain the usual agents that make ordinary paper glow slightly under ultraviolet light. Unlike most printing and writing paper, banknote paper is infused with polyvinyl alcohol or gelatin to give it extra strength. Early Chinese Paper Money were printed on paper made of mulberry bark and this fiber is used in Japanese banknote paper today. Most Banknotes are made using the mould made process in which a watermark and thread is incorporated during the paper forming process. The thread is a simple looking security component found in most Paper Money. It is however often rather complex in construction comprising fluorescent, magnetic, metallic and micro print elements. By combining it with watermarking technology the thread can be made to surface periodically on one side only. This is known as windowed thread and further increases the counterfeit resistance of the banknote paper. This process was invented by Portals, part of the De La Rue group in the UK. Other related methods include watermarking to reduce the number of corner folds by strengthening this part of the note, coatings to reduce the accumulation of dirt on the note, and plastic windows in the paper that make it very hard to copy.
The ease with which paper money can be created, by both legitimate authorities and counterfeiters, has led both to a temptation in times of crisis such as war or revolution to produce paper money which was not supported by precious metal or other goods, thus leading to hyperinflation and a loss of faith in the value of paper money, e.g. the Continental Currency produced by the Continental Congress during the American Revolution, the Assignats produced during the French Revolution, the paper currency produced by the Confederate States of America and the Individual States of the Confederate States of America, the financing of World War I by the Central Powers (by 1922 1 gold Austro-Hungarian krone of 1914 was worth 14,400 paper Kronen), the devaluation of the Yugoslav Dinar in the 1990s, etc. Paper Money may also be overprinted to reflect political changes that occur faster than new currency can be printed.
In 1988, Austria produced the 5000 Schilling Paper Money (Mozart), which is the first foil application (Kinegram) to a paper banknote in the history of Paper Money printing. The application of optical features is now in common use throughout the world.Many countries' Paper Money now have embedded holograms.
The use of paper money as a circulating medium is intimately related to shortages of metal for coins. In ancient China coins were circular with a rectangular hole in the middle. Several coins could be strung together on a rope. Merchants in China, if they became rich enough, found that their strings of coins were too heavy to carry around easily. To solve this problem, coins were often left with a trustworthy person, and the merchant was given a slip of paper recording how much money he had with that person. If he showed the paper to that person he could regain his money. Eventually, the paper money called "jiaozi" originated from these promissory notes.
 In the 600s there were local issues of paper currency in China and by 960 the Song Dynasty, short of copper for striking coins, issued the first generally circulating notes. A note is a promise to redeem later for some other object of value, usually specie. The issue of credit notes is often for a limited duration, and at some discount to the promised amount later. The jiaozi nevertheless did not replace coins during the Song Dynasty; paper money was used alongside the coins.
The successive Yuan Dynasty was the first dynasty in China to use paper currency as the predominant circulating medium. The founder of the Yuan Dynasty, Kublai Khan, issued paper money known as Chao in his reign. The original notes during the Yuan Dynasty were restricted in area and duration as in the Song Dynasty, but in the later course of the dynasty, facing massive shortages of specie to fund their ruling in China, began printing paper money without restrictions on duration. By 1455, in an effort to rein in economic expansion and end hyperinflation, the new Ming Dynasty ended paper money, and closed much of Chinese trade.
In the Indian sub-continent a similar system evolved called the hundi system. The history of these instruments has not been widely studied but it is quite likely that these were in common use hundreds of years ago, being designed to assist in Indian trade, which was extensively practiced across the world in the past. A Hundi is basically an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order. Hundis, similar to Banknotes, were issued by indigenous bankers and used in trade and credit transactions and to transfer funds from one place to another, a kind of travellers cheque. They were also used as credit instruments for borrowing and as bills of exchange for trade transactions.
In mediaval Italy and Flanders, because of the insecurity and impracticality of transporting large sums of money over long distances, money traders started using promissory notes. In the beginning these were personally registered, but they soon became a written order to pay the amount to whoever had it in their possession. These notes can be seen as a predecessor to regular bank notes.
The first proper European banknotes were issued by Stockholms Banco, a predecessor of the Bank of Sweden, in 1660, although the bank ran out of coins to redeem its notes in 1664 and ceased operating in that year.
Until Louis XIV, banknotes were issued by small creditors, had limited circulation, and were not backed by the authority of the state. Economist John Law helped establish banknotes as formal currency, backed by capital consisting of French government bills and government accepted notes.
Paper money collecting is probably as old as the banknotes itself. However this segment of the numismatic hobby did not begin to reach famus approaching that of coin collecting until the later half ofthe 1970's. While coins and Banknotes are alike in that both served as legal obligations to facilitate commerce, long time paper money enthusiasts know the similarity ends there.
Coins were historically guaranteed by the intrinsic value of their metallic content at least until recent years when virtually all circulating coins have become little more then leagal tender tokens, containing little or no precious metals at all, while paper money possesses a value only when it is accepted for debts or converted into BU Coins or Precious Metals. With many note issue, this conversion privilege was limited.
The divelopment of widespread collector interest in paper money of most nations was inhibited by a near total absenceof adequate documentation. No more than 4 decades ago collectors could refer to only a few catalogs and dealer price lists of limited scope, most of which were difficult to acquire, or they could build their own knowledge through personal collecting pursuits and contact with fellow collectors.

A specimen banknote is printed to as a way of checking to see whether or not the design is suitable for putting into full production as a currency issue.Sometimes, specimen banknotes are printed for distribution to central banks to aid in the recognition of Banknotes from a country other than their own.

Polymer banknotes were developed by the Reserve Bank of Australia (RBA), Commonwealth Scientific and Industrial Research Organisation (CSIRO) and The University of Melbourne and were first issued as currency in Australia in 1988. These banknotes are made from the polymer biaxially-oriented polypropylene (BOPP) which greatly enhances durability of the banknotes. Polymer banknotes also incorporate many security features not available to paper banknotes, making counterfeiting much more difficult.
Trading as Securency, the RBA together with Innovia Films market BOPP as 'Guardian' for countries with their own banknote printing facilities. Note Printing Australia (a subsidiary of the RBA) prints commemorative banknotes and banknotes for circulation and has done so for 20 countries.
An alternative polymer of polyethylene fibres marketed as Tyvek by DuPont was developed for use as currency by the American Bank Note Company in the early 1980s. Tyvek did not perform well in trials; smudging of ink and fragility were reported problems. Only Costa Rica and Haiti issued Tyvek banknotes; test notes were produced for Ecuador, El Salvador, Honduras and Venezuela but never placed in circulation. Additionally, English printers Bradbury Wilkinson produced a version on Tyvek but marketed as Bradvek for the Isle of Man in 1983; however, they are no longer produced and have become collectors' items.