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this money in the form of paper is moved from the previous barter system.

in the previous barter system, there was no guarantee of the system. the value in the products bartered was based on the urgency of the requirement. as we moved from barter system to money based system, there is a need that somebody takes ownership of that piece of paper. who can take ownership of that paper. only government. thus the central bank of any country signs that document saying that he will pay that amount of paper if and need arises.

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