26-08-2017, 03:00 PM
A bank is a financial institution that accepts deposits from the public and creates credit. Loan activities can be carried out directly or indirectly through the capital markets. Because of their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks have liquid assets equal to only a portion of their current liabilities. In addition to other regulations aimed at ensuring liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.
Banking in its modern sense developed in the fourteenth century in the prosperous cities of Renaissance Italy, but in many ways it was a continuation of ideas and concepts of credit and loans that had their roots in the ancient world. In banking history, several banking dynasties-notably the Medicis, the Fuggers, the Welsers, the Berenberg, and the Rothschilds-have played a central role over many centuries. The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg bank.
The banking began with the first prototype of dealer banks of the ancient world, which made grain loans to farmers and merchants who transported goods between cities. This began around 2000 BC in Assyria and Babylon. Later, in ancient Greece and during the Roman Empire, temple lenders made loans and added two major innovations: they accepted deposits and exchanged money. Archeology of this period in ancient China and India also shows evidence of money lending activity.
The origins of modern banking go back to medieval Italy and early Renaissance, to the rich cities in the center and north as Florence, Lucca, Siena, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, created by Giovanni di Bicci de Medici in 1397. The first known state deposit bank, Bank of St. George, was founded in 1407 in Genoa, Italy.
Modern banking practices, including fractional reserve banking and ticketing, emerged in the seventeenth and eighteenth centuries. The traders began to store their gold with the goldsmiths of London, who had private vaults, and charged a fee for that service. In exchange for each deposit of precious metals, the goldsmiths issued receipts certifying the quantity and purity of the metal they had as deposit; these receipts could not be assigned, only the original depositor could collect the stored goods.
Little by little the goldsmiths began lending money on behalf of the depositor, which led to the development of modern banking practices; the promissory notes (which became notes) were issued for the money deposited as a loan to goldsmiths. The goldsmith paid interest on these deposits. Since promissory notes were paid in cash and advances from goldsmith customers were repayable over a longer period of time, this was an early form of fractional reserve banking. The promissory notes became an assignable instrument that could circulate as a safe and convenient form of money backed by the promise of the goldsmith to pay, allowing the goldsmiths to advance loans with little risk of default. Thus, goldsmiths in London became the forerunners of banking through the creation of new funds based on credit.
The Bank of England was the first to begin the permanent issuance of banknotes in 1695. The Royal Bank of Scotland established the first overdraft facility in 1728. In the early nineteenth century a London clearing house was set up to allow multiple banks To settle the transactions. The Rothschilds pioneered large-scale international finance, financing the purchase of the Suez Canal for the British government.
Banking in its modern sense developed in the fourteenth century in the prosperous cities of Renaissance Italy, but in many ways it was a continuation of ideas and concepts of credit and loans that had their roots in the ancient world. In banking history, several banking dynasties-notably the Medicis, the Fuggers, the Welsers, the Berenberg, and the Rothschilds-have played a central role over many centuries. The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg bank.
The banking began with the first prototype of dealer banks of the ancient world, which made grain loans to farmers and merchants who transported goods between cities. This began around 2000 BC in Assyria and Babylon. Later, in ancient Greece and during the Roman Empire, temple lenders made loans and added two major innovations: they accepted deposits and exchanged money. Archeology of this period in ancient China and India also shows evidence of money lending activity.
The origins of modern banking go back to medieval Italy and early Renaissance, to the rich cities in the center and north as Florence, Lucca, Siena, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, created by Giovanni di Bicci de Medici in 1397. The first known state deposit bank, Bank of St. George, was founded in 1407 in Genoa, Italy.
Modern banking practices, including fractional reserve banking and ticketing, emerged in the seventeenth and eighteenth centuries. The traders began to store their gold with the goldsmiths of London, who had private vaults, and charged a fee for that service. In exchange for each deposit of precious metals, the goldsmiths issued receipts certifying the quantity and purity of the metal they had as deposit; these receipts could not be assigned, only the original depositor could collect the stored goods.
Little by little the goldsmiths began lending money on behalf of the depositor, which led to the development of modern banking practices; the promissory notes (which became notes) were issued for the money deposited as a loan to goldsmiths. The goldsmith paid interest on these deposits. Since promissory notes were paid in cash and advances from goldsmith customers were repayable over a longer period of time, this was an early form of fractional reserve banking. The promissory notes became an assignable instrument that could circulate as a safe and convenient form of money backed by the promise of the goldsmith to pay, allowing the goldsmiths to advance loans with little risk of default. Thus, goldsmiths in London became the forerunners of banking through the creation of new funds based on credit.
The Bank of England was the first to begin the permanent issuance of banknotes in 1695. The Royal Bank of Scotland established the first overdraft facility in 1728. In the early nineteenth century a London clearing house was set up to allow multiple banks To settle the transactions. The Rothschilds pioneered large-scale international finance, financing the purchase of the Suez Canal for the British government.