What is the difference between a commercial paper and a bank note?

What is the difference between a commercial paper and a bank note Introduction: The World of Financial Instruments Hello and welcome to our video on the distinctions between commercial papers and bank notes. In the vast landscape of financial instruments, these two entities hold a prominent position. While they may seem similar at first glance, they serve distinct purposes and are governed by different regulations. So, let's embark on this journey of exploration and understanding. Defining Commercial Papers: A Brief Overview Commercial papers, often referred to as CPs, are short-term debt instruments issued by corporations, financial institutions, and sometimes even governments. They are typically unsecured, meaning they are not backed by collateral. CPs have a maturity period of less than a year, ranging from a few days to several months. Due to their short-term nature, they are considered a flexible financing option for businesses in need of immediate funds. Bank Notes: A Closer Look Bank notes, on the other hand, are a form of currency issued by central banks. They are legal tender, meaning they can be used for transactions within the country of issuance. Unlike commercial papers, bank notes are not a debt instrument. Instead, they represent a direct claim on the central bank's assets.