The first country to use paper money is believed to be China during the Tang Dynasty, around the 7th century AD. Paper money became widely used during the Song Dynasty (960-1279 AD) as a means to facilitate trade and commerce, replacing the cumbersome metal coins. The innovation of paper currency significantly impacted economic systems, making transactions easier and more efficient. Over time, the concept of paper money spread to other regions, revolutionizing financial practices and establishing the foundation for modern currency systems.