Quick Answer: A banknote or bank note – also called a bill or simply a note – is a type of paper money that is made and distributed by a bank of issue, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender when presented to the chief cashier of the originating bank. These commercial banknotes were only traded at face value in the market served by the issuing bank. Commercial banknotes have primarily been replaced by national banknotes issued by central banks or monetary authorities. By extension, the word "banknote" is sometimes used to refer more generally to paper money, but in a strict sense notes that have not been issued by banks, e.g. government notes, are not banknotes. National banknotes are often, but not always, legal tender, meaning that courts of law are required to recognize them as satisfactory payment of money debts.