What was the function of "flying money" in Song commerce?

• A. An early form of credit-based paper money used by merchants for long-distance trade
• B. A state-issued coinage used for taxation
• C. A system of merchant tokens backed by gold
• D. A bank loan program limited to government merchants

Answer: (C)

Flying money describes an early form of credit-based paper money that merchants used to move value across long distances without lugging heavy coins. In practice, a trader would leave coins with a trusted broker in one city and receive a transferable note—flying money—that could be cashed for coin in another city. This created a network of credit that circulated with commerce, allowing far-flung markets to settle payments more efficiently. It isn’t about state-issued coinage for taxation, nor a system of gold-backed merchant tokens, nor a bank loan program limited to government merchants. The main idea is using paper-based credit to facilitate long-distance trade, laying groundwork for later government-backed paper money.