Parliament forbade the Bank of England to redeem its notes in coin because the government wished to borrow the coin the bank held.

The result was the issue of a large amount of bank money not subject to the ordinary rule of redemption on demand.

It was virtually governmental paper money.

The notes depreciated and drove gold out of circulation, and it was not until 1821 that specie payments were definitely resumed.
The United States, under the Constitution, did not try legal-tender paper money till 1862 when paper notes (called greenbacks, because of the color of ink with which the reverse side was printed) were first issued, later increased to a total of about $450,000,000.

Other interest-bearing notes were issued with the legal-tender quality and circulated as money to some extent.