What is “a bill of exchange” used for?

The story behind the answer

A bill of exchange was a written order instructing a banker or agent in another city to pay a specified sum to a named person at a set time. By converting coin into a document redeemable elsewhere, merchants could transfer value over long distances without hauling cash—reducing the risks of theft, loss, and currency mismatches at city gates and fairs. It was not a title to goods, a consumer loan, or an insurance policy; it was a portable, negotiable payment instrument.

Developed by Italian merchant-bankers and popular at the Champagne Fairs (12th–14th centuries), bills could be endorsed to others or discounted for early cash, greasing the wheels of medieval commerce. They also masked interest as “exchange fees,” helping merchants navigate usury bans, and they foreshadow modern checks and drafts.