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History of banking

Some sort of financial institutions became necessary as soon as humans established some economy. The first banks are believed to have been the religious temples of the ancient world. Objects of wealth were naturally kelp in these sacred places and gold was stored inside as easy to carry compressed plates. Owners of such wealth felt rightly that the temples were the safest places to store their assets as they were constantly monitored and their sacredness should deter most potential thieves. The first existing records of loans date from the eighteenth century BC in Babylon Fprolthat were made by temple priests to merchants.

Banking then moved to Ancient Greece, as civilization spread from Mesopotamia to Egypt, Crete and then Grece. Greek temples as well as some private organizations conducted financial transactions such as loans, deposits or foreign exchange. There are records of credit a few hundred years before Jesus Chris was born. Credit notes were used that could be written in one Greek port but cashed in another, so that merchants did not need to carry large quantity or coins while travelling the seas,  avoiding the risk of a big loss by pirates or if the boat sunk.

Ancient Rome added their own improvements to banking and saw greater regulation of financial institutions and financial practices. Charging interest on loans and paying interest on deposits became more common and competitive. The rise of Christianity in Rome and its influence restricted banking, as usury was considered immoral. Jews businessmen without taboos about money from their religion filled the void in providing credit to the increasing demand for financial services due to the expansion of European trade.

In Europe banking takes a new turn with Jonathan’s coffee-house of Jonathan, which later became the London Stock Exchange. It was a market place for merchants trading stocks. In 1698 John Casting starts to publish a weekly newsletter tracking commodity prices, which he sold to Jonathan. One of the oldest banking institutions in London is the still active today Barclays Bank, founded in 1690.

In the late eighteenth century with the advent of democratic capitalism there was a massive growth in the banking industry. In the new system of ownership and investment, moneyholders managed to reduce state intervention in economic affairs, to remove barriers to competition, and in general allowing anyone willing to work hard enough and with enough capital, to become a venture capitalist. It took another 100 years though for this type of capitalism to reach the shores of North America.

By the early 1900s, New York was beginning to emerge as the leading financial center in the world. Businesses and individuals were acquiring large investments in companies in the United States and Europe, creating the first true global market. This relatively high level of market integration has proved particularly beneficial when the war came as the two parties were looking for funds from the United States, issuing shares or selling existing assets.

Global capital market services exploded in the last two decades of the twentieth century as demand from all economic participants increased, but also because financial market conditions were highly positive for growth. However, in recent years, the dominance of U.S. financial markets has reduced with a growing appetite for equities. This extraordinary growth of foreign financial markets resulted in a large increase in the pool of savings starting with Japan and later China. Nowadays universal banks are free to engage in all forms of financial services, investing and providing retail and wholesale financial services.