A Brief History of Banking
If you've ever wondered exactly how it is that modern banking
originated, you're not alone. Though many of the practices of
modern banking have come about only within the past one hundred
years (or less), some of the early basis for modern banking can
be traced back to the Middle Ages and before.
Below you'll find some basic information on some of the origins
of banking, from the early days of the barter system and the
banks of the old empires to the moneylenders of the Middle Ages,
as well as some of the more recent developments that have
evolved into the modern banking system that we know and use
today.
Before Banking
As some form of banking has existed for most of written history,
there isn't very much information available about what life was
like before banking of any form existed.
Most likely there was a barter system of some sort in place,
where individuals traded goods and services for other goods and
services without an official currency or exchange rate set.
Variations of the barter system continue to exist today, though
it is nowhere near as widely used as it was as little as 50
years ago.
Early Origins of Banking
As early as the days of ancient Greece and Rome there was
evidence of at least a rudimentary banking system in place.
Coins were minted bearing the likenesses of emperors and other
rulers, and goods and services were paid for using these coins
in addition to standard barter.
Tribute was also paid to rulers in coins as well as goods and
services, and these transactions were recorded by financial
officers within the palace or government.
Unfortunately, the value of currency and the currency that could
be used often varied from ruler to ruler and emperor to
emperor... especially in cases where one ruler was overthrown by
another and the previous ruler's coins were rendered useless.
Banking in the Middle Ages
By the time the Middle Ages came around, banking had evolved
into a more stable form in the guise of moneylenders. These
individuals would set up a table or bench in marketplaces,
offering loans with interest much like modern banks.
Unlike modern banks, however, many of the moneylenders were
corrupt and sought only to make as much profit as possible from
those who needed their services.
Competition between moneylenders could be fierce, as well...
after all, there was only so much of a market for their services
to go around.
Moneylenders who failed in their business efforts often broke
apart their bench (known as a "banca"), and it is from them that
we get both the word "bank" (from the benches they did business
on) and "bankrupt from the breaking apart of their benches.
Modern Banking
Obviously, banking has come quite a way from the corrupt
moneylenders of the Middle Ages. Banks are now regulated by the
government on a national level and are watched by a variety of
groups to ensure that their practices are just.
There are also a variety of account types and banking services
that have evolved from the original loans offered by
moneylenders... savings, cheques, and even money market and
investment accounts.
The advent of the internet has added even more banking services,
and account access to a level that has never been seen before.
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