A Brief History of Banking
June 24, 2022
We are now in a very new phase of banking and financial services, as technologies like blockchain radically alter the financial services landscape and bring far more equity to a very unbalanced and unrepresentative banking system.
Although the earliest concept of banking can be traced back to pre-Roman times, the origins of the traditional banking system originated in Italy during the 14th century. The oldest bank in existence today is “Banca Monte dei Paschi di Siena S.p.A., known as BMPS or just MPS” located in Sienna, Italy.
From these early beginnings the banking system spread throughout the Roman Empire, which accounted for about 20% of the world’s population at that time. Further developments in banking occurred in the 17th century in Holland and in England in the 18th century with London being one of the largest banking cities in the world. Computing and telecommunications, catapulted banking into the greater mainstream in the 20th century.
The earliest types of “money” were grain money and cattle money (9000 years B.C.E) and in fact in many parts of the world today, cattle are still considered currency and used for traditional practices such as the payment of dowry in marriage and as a measure of wealth. Record keeping of transactions during this period was done with the use of “tokens” called Bulla which were records written on soft metal, wax paper or inscribed clay which recorded stocks of produce. Recording stocks of produce was essential to early economy and are similar in concept to blockchains that record data.
The earliest “Bill of Exchange” has been discovered in India and originates from the Maurya Dynasty, around 320 B.C.E. The instrument was called “Adesha” which was an order on a banker desiring him to pay the money of the note to a third person. In 1695, The Bank of England became the first bank to start issuing “Bank Notes” which were hand written promises to pay and which is where cheques and money originate from.
Scholars indicate that the first central bank was located in Alexandria in Egypt, where granaries throughout the Egyptian kingdom were transformed into a network of regional grain banks and all transactions were recorded in Alexandria. The Bank of Amsterdam was the first modern bank to start developing a modern central bank in 1668.
After the second world war and the introduction of The Bretton Woods System, The World Bank and The International Monetary Fund were created.
Empowch is working toward bringing equity to the financial services sector by onboarding the unbanked and under banked and providing them with cost effective financial services that are instant, efficient, simple and borderless to help the unbanked empower their pockets.