BANKING
MAY 28, 2021
the long history of banking : from temples to complex transactions systems
The long history of banking has been forming the economy of mankind for thousand of years, building modern economy civilization. With more growth in economy and investments we rely our money in this financial institution.
It is impossible to have exact time when banking began. The story of banking may have started around 2.000 BC in Assyria, India and Sumeria. Those prototype banks gave grain loans to farmers and traders who carried goods between cities.
The term bank itself is either derived from Old Italian word “banca” or from a French word “banque” both mean a Bench or money exchange table. This could be possible as some early bankers would do transactions for their business on benches in the market place.
Another evidence even shows that banking may have started properly long before, around 8.000 BC. It was more like record keeping of trading activities that were being made. It could be some specific institutions for that purpose or something like that. The records that we have are people making trades and record their trades down in a log.
Some temples and palaces throughout Babylonia and other cities provided lending activities during ancient Mesopotamia. These could be considered as the first proper banks, although they were not in the form of financial lending. They would lend out seeds and the like to farmers and the farmers would pay back later when it came to the harvest time.
During that time temples, royal palaces and some private houses served as storage facilities for valuable commodities. Some records of loans by the temples of Babylon dates back as early as 2.000 BC. Temples were considered safe depositories because their contents were believed to be protected from theft and they were sacred places watched over by gods.
Some records of credit also recorded around this time thru Asian civilization such as the Temple of Artemis that held a deposit for cash and records of debts.
Banks really started to form in the medieval period across European continent. The earliest banks were founded in Italy in the middle of the 12th century in Venice and Genoa. Some experts believe the history of modern banking started when The Bank of Venice was founded in 1157. Followed by The Bank of Barcelona and The Bank of Genoa in 1401 and 1407 respectively.
In fact, the term “bankrupt” comes from the word “banca rotta” in Italian. It was when a trade failed to deliver on their promised route and declared “banca rotta”.
The modern form of proper banking began with the English goldsmith only after 1640. The Goldsmiths of London was more a series of vaults which charged a fee for their services.
The first bank to offer banknotes was the Bank of England, established in 1694. They were promissory notes, initially. Joint stock commercial banking started to manifest in 1833. The biggest changes to the world of banking happened in the 17th to 19th centuries as a matter of fact.
It was in the early 20th century when banks really started to become the way we know them properly. In the 1950’s banks started to lend money, ranging from countries to individual for business purposes. The retail banking started to become our daily needs as well as technology that developing fast to help manage transactions better such as ATM systems and online transfers.
Today, in the 21st century we have seen new communities emerging everywhere around the globe with the need for increasingly complex banks to mediate between borrowers and lenders, businesses and investors.
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