Banknotes were originally IOUs for gold deposits held at the Bank of England. People used them to pay for things safe in the knowledge that they were backed by the promise to pay the equivalent value in gold.
This confidence in banknotes is important for keeping the whole economy functioning. It is for this reason that we work hard to ensure that banknotes are high quality, durable and difficult to counterfeit.
Coins are manufactured and issued by the Royal Mint. See their website for information on all coins issued in the UK.