A banknote is a piece of paper or cloth that is used as a form of currency. Banknotes are usually issued by a government and are often backed by gold or silver. They are used to buy goods and services, and can also be used to finance trade.
The value of a banknote is based on the issuing authority’s promise to redeem it for an equivalent amount of gold or silver. In some cases, banknotes may also be backed by other commodities such as oil. The issuer of the note determines its value and prints it on the note itself.
Banknotes are typically made from high-quality paper or cloth, and their designs often include intricate security features to deter counterfeiting. When issued by central banks, they are also known as reserve notes.