The rare Ming Dynasty paper banknote was hidden in the wooden sculpture of a Chinese religious figure more than 600 years ago.

Art experts in Australia have found a rare paper banknote from the Ming Dynasty of Imperial China hidden inside an antique wooden sculpture that was being prepared for auction.

The Chinese characters on the crumpled banknote show that it was issued in the third year of the reign of Zhu Yuanzhang, the first emperor of the Ming Dynasty — or 1371 in the Western calendar. The inscriptions also warn would-be counterfeiters that they face the penalty of death by beheading.

The 645-year-old banknote was found hidden inside a wooden sculpture of the head of a "luohan," a religious figure from Chinese Buddhism, that may once have stood in a family or public temple, said Paul Sumner, chief executive of Mossgreen's Auctions in Melbourne, Australia, which discovered the note. [See photos of the paper banknote that dates back to China's Ming Dynasty]

Sumner said the firm's specialist in Asian artworks, Ray Tregaskis, spotted the note wedged inside the hollow head of the sculpture as he inspected the artifact in preparation for an auction in Sydney, Australia, next month.

"It wasn't easy to see — it was hidden right up out of eyesight, folded up into a little, 1-inch [2.5 centimeters] fold," Sumner told Live Science. "The note has been in at least two collections that we know of without the knowledge of the owners."

Currency experts at Mossgreen's Auctions immediately identified the note as a rare paper "bank seal" that was issued in China during the Ming Dynasty.

"It wasn't in very good condition, as you'd imagine with all those folds and after hundreds of years with some degree of exposure to the elements," Sumner said.

Very few of these Ming Dynasty banknotes have survived to present day, he added, "bearing in mind that they were constantly being handled — it's not like people kept them in plastic sleeves, like collectors would today."

Ming money

The Ming Dynasty banknote is much larger than modern paper money, roughly equivalent to the size of a standard "U.S. letter" page of paper.

Chinese characters and official seals printed in red and black ink declare that the note is a "Great Ming Treasure Note" with a value of "one guan" — depicted as 10 "strings" of Chinese copper coins, which could be grouped with a string through the hole in each coin.

According to the American historian of Chinese currency John E. Sandrock, one guan was equivalent to 1,000 copper coins, or 1 ounce (28 grams) of pure silver.

The newfound banknote also includes a dire warning to counterfeiters that they will be punished with decapitation, and offers a large reward to anyone who informs on such criminals.

At the time this banknote was issued, paper money was almost unheard of outside China. The first European banknotes date from the mid-17th century, around 300 years later. [The 25 Most Mysterious Archaeological Finds on Earth]

Based on the date on the banknote and the expert dating of the sculpture it was found in, it's thought the money may have been hidden as a religious offering when the sculpture was already 30 to 50 years old, Sumner said.

Small offerings like inscriptions on paper, rice grains and semiprecious stones are often found sealed inside the bases of antique Chinese figurines, he said. However, a high-value banknote is considered an extraordinary find, he said.

"From our point of view, what makes the banknote important is that the dating is very close to the dating we'd assumed from stylistic details about the [louhan] figure, as well as the intrigue factor of finding it," Sumner said.

Long journey

Sumner said the sculpture that held the hidden banknote was purchased by the Australian art collector Raphy Star from a specialist dealer in the United Kingdom, but nothing is known about the artifact's origins in China.

"These figures were created for veneration and for spiritual use, sometimes in temples and sometimes in homes," Sumner said. "It may have been part of a larger figure, and because of its size, [we can conclude that] it probably stood in a temple."

The long journey of the sculpture and its hidden banknote may not be over yet: Both artifacts are up for auction in Sydney on Dec. 11, along with the rest of the Raphy Star collection, and are likely to return to China, Sumner said.

"The Chinese have been major buyers for a long time now, and have been repatriating important pieces back to China — particularly mainland China," he said.

The entire Raphy Star collection of artworks from China, Japan and Southeast Asia could fetch up to 5 million Australian dollars ($3.7 million U.S.) at auction, Sumner said.

The louhan sculpture and banknote will be sold together, as a single lot, with an estimated value of up to 45,000 Australian dollars ($34,000 U.S.).

"It's not that we were worried about being beheaded ourselves, but we just thought it might have been more auspicious to keep the two together," Sumner said. "It's such a great story that we didn't really want to separate them."

Original article on Live Science.