'banknote' is a compound of 'bank' + 'note'. 'bank' originates from Middle French 'banque' (from Old Italian 'banca') where 'banca' meant 'bench' (referring to the moneylender's table), and 'note' originates from Latin 'nota' meaning 'mark' or 'written note'.

'bank' entered English via Middle English and Middle French from Old Italian 'banca' ('bench'); 'note' came into English from Old French 'note' and ultimately from Latin 'nota'. The compound 'banknote' developed in the early 19th century to name paper money issued by banks.

Initially the elements referred to a bank (the institution/bench) and a written 'note' (a promise or record). Over time the compound 'banknote' came to mean specifically 'paper money issued by a bank' rather than just a written promise.