China was the first country to use paper money during the Tang Dynasty, around the 7th century. The concept gained prominence during the Song Dynasty, approximately in the 11th century, as a solution to the problem of carrying large amounts of metal coins. The use of paper currency facilitated trade and commerce, making transactions more efficient. The earliest forms of this currency were known as "jiaozi" and were backed by the government. This innovation in the financial system laid the foundation for modern monetary practices and the eventual global use of paper money.