History of Banking

The history of banking began with the first prototype banks which were the merchants of the world, who made grain loans to farmers and traders who carried goods between cities. This was around 2000 BC in Assyria, India and Sumeria. Later, in ancient Greece and during the Roman Empire, lenders based in temples made loans, while accepting deposits and performing the change of money. Archaeology from this period in ancient China and India also shows evidence of money lending.

Many histories position the crucial historical development of a banking system to medieval and Renaissance Italy and particularly the affluent cities of Florence, Venice, and Genoa. 

The Bardi and Peruzzi families dominated banking in   14^th century Florence, establishing branches in many other parts of Europe. The most famous Italian bank was the Medici bank, established by Giovanni Medici in 1397. The oldest bank still in existence is Banca Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.

Development of banking spread from northern Italy throughout the Holy Roman Empire, and in the 15^th and 16^th century to northern Europe. This was followed by a number of important innovations that took place in Amsterdam during the Dutch Republic in the 17^th century, and in London since the 18^th century. During the 20^th century developments in telecommunications and computing caused major changes to banks operations and let banks dramatically increase in size and geographic spread. The financial crisis of 2007-2008 caused many bank failures, including some of the world’s largest banks and provoked much debate about bank regulation

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