In the Buddhist belief structure, Hell is an inbetween place of learning, where your spirit resides while waiting to be reborn; it is also a place of punishment. Unlike Christian beliefs, Hell is not run by Satan or any other evil creature; rather, it is run by the God of Hell. To be more precise, it is only called Hell because, when Christian missionaries came to these countries, to the native Asians 'Hell' was the closest English word to describe this afterlife.
For thousands of years, cultures steeped in Buddhist beliefs have practiced the tradition of creating paper money, which is legal tender in Hell. This money is referred to as 'hell notes', also known as ch'ien, or spiritual money. Hell notes are found in many Asian countries, but most prominently in China. As with many death-related practices in Asian countries, this tradition pre-dates Buddhism; however, it has a Buddhist explanation now.
Hell notes come in many different colors, sizes, and designs. They can range from about half the size of an American dollar to ten by five inches and even larger. Some are printed using only one or two colors, whereas the more expensive ones can have many. Most utilize four or five colors. Most hell notes are similar in many ways: all depict the Bank of Hell on the back, and almost all have a picture of the God of Hell on the front. Common symbols and pictures seen on hell notes, besides the Bank of Hell and the God of Hell, are lucky symbols; four coins with a dragon on each of them (these symbolize the four seasons of the year and the four time periods of life); and the Dragon of Hell, which moves through the spiral of Earth Spirits, dispensing knowledge and good fortune. Most hell notes are often printed on cheap, flimsy paper, for some reason or another. Hell notes can be found in increments from $1.00 to $1,000,000,000.00.
The God of Hell and the God of Money are the two most prominent beings in Hell. The God of Hell, who is the Keeper of the Gate and the High Judge, is most often depicted with a long fu manchu, wearing the traditional ceremonial crown of an imperial judge, but with nine pearl strands, indicating he is of the highest rank; he is often seen wearing the tradional vest of the highest emperor warrior, displaying his ultimate power over the spirits of those who come before him for judgement. On the other hand, the God of Money, who runs the Bank of Hell, is depicted as a wizened old man with a flowing white beard; he is often pictured with his manservant standing behind him. This manservant is the keeper of the bank's records for those who have burned money for those in the afterlife.
Very few Americans had ever heard of hell notes until many G.I.s returned from their tour of duty, bringing hell notes with them. Incidentally, it is almost unheard of to find hell notes in America that pre-date World War II.
In addition to hell notes, many other objects can be purchased which work similarly to hell notes, such as paper cars and houses. Hell notes, and other hell merchandise, is most often purchased for funerals, and also for the Chinese New Year. It is then burned, so that the person who has just died, or perhaps a long deceased ancestor, will have money to spend if they have ended up in Hell. With this money, the deceased can buy pretty much anything you can buy on earth; a TV, books, a bicycle, clothing, etc.
All in all, hell notes are an important part of a beautiful tradition that symbolizes great love and respect for one's ancestors and lost loved ones.
Sources:
http://www.wscoin.com/Info/BillionHellNote.htm
http://www.wscoin.com/Info/HellNotes.htm