The history of banking
Did you know?
The history of money and banking are inseparably interlinked. Interestingly though, the history of banking probably predates the history of money. Deposits initially consisted of grain and livestock.
What is a bank?
A bank connects customers that have capital deficits to customers with capital surpluses. A bank serves as a financial intermediary. Most banks hold only a small reserve of the funds deposited and lend out the rest for profit.
The First Banks
The first banks were the merchants of the ancient world that made loans to farmers and traders. The first records of banking date back to around 2000 BC in Assyria and Babylonia.
Banking, in the modern sense of the word, can be traced to medieval and early Renaissance Italy. Perhaps the most famous Italian bank was the Medici bank. This bank was established by Giovanni Medici in 1397.
The 21st Century
Developments in telecommunications and computing have resulted in major changes to the way banks operate today. To name one – banking institutions are no longer confined by geographical borders.