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Definition of Bank Note

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Definition: In periods of free banking, such as most states in the U.S. from 1839-1863, banks could issue their own money, called bank notes. A bank note was a risky, perpetual debt claim on a bank which paid no interest, and could be redeemed on demand at the original bank, usually in gold. There was a risk that the bank would not be able or willing to redeem it.

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