<P> Spaniards at the time of the Age of Exploration discovered vast amounts of silver, much of which was from the Potosí silver mines, to fuel their trade economy . Potosí's deposits were rich and Spanish American silver mines were the world's cheapest sources of it . The Spanish acquired the silver, minting it into the peso de ocho (a currency) to then use it as a means of purchase; that currency was so widespread that even the United States accepted it as valid until the Coinage Act of 1857 . As the Spanish need for silver increased, new innovations for more efficient extraction of silver were developed, such as the amalgamation method of using mercury to extract silver from ore . </P> <P> In the two centuries that followed the discovery of Potosí, the Spanish silver mines in the Americas produced 40,000 tons of silver . Altogether, more than 150,000 tons of silver were shipped from Potosí by the end of the 18th century . From 1500 to 1800, Mexico and Peru produced about 80% of the world's silver with 30% of it eventually ending up in China (largely because of British merchants who used it to purchase exotic Chinese commodities). In the late 16th and early 17th century, Japan was also exporting heavily into China and the foreign trade at large . </P> <P> As has been demonstrated, China dominated silver imports . The market value of silver in the Ming territory was double its value elsewhere, which provided great arbitrage profit for the Europeans and Japanese . The abundance of silver in China made it easy for the country to mint it into coinage . That process was so widespread that local Chinese government officials would demand taxes to be paid in silver to the point that silver eventually backed all of China's economy . </P> <P> The world's first paper money ("flying money") was invented by the Chinese and they needed some commodity to back it . Traditional coins were useful, but the amount of coins needed for large purchases could be bulky and dangerous to transport . That problem was solved when the Chinese created small pieces of paper with pictures of the coin printed on them . By the nature of their geography, China had no real amount of precious metals of their own to back the paper money they invented . Because the Spaniards didn't find gold but did find copious amounts of silver, the Spaniards and the rest of Europe used this silver to purchase the commodities of choice from China, solving both of their problems . </P>

Describe the impact of new world gold and silver on the economies of europe