International Banks Day: History of the Banks
Baku, December 4, AZERTAC
December 4th is celebrated as International Banking Day, a day dedicated to acknowledging the critical role banks play in shaping economies, fostering development, and supporting financial inclusion, Kazinform News Agency reported.
Ancient history
The history of banking dates back to ancient times. The first banking institutions emerged thousands of years ago in Mesopotamia, where temples acted as secure storage for valuables and grain. Priests managed these resources, lending them to farmers and traders, with every transaction meticulously recorded on clay tablets.
In Ancient Egypt and Greece, temples served as early financial institutions, accepting deposits and providing loans. Similarly, in Rome, temples like the Temple of Saturn played a key role in financial operations, even housing the state treasury. However, as prominent financial hubs, temples often became targets during wars and were frequently looted.
Over time, moneylenders and private depositories began to appear. Temples often issued large loans, even to rulers, while moneylenders catered to merchants and small borrowers.
After the fall of the Roman Empire in the 5th century, the banking system entered a period of decline. Banking, as a set of financial operations, survived through the Middle Ages, thanks to papal bankers and knightly orders such as the Templars.
Middle Ages
In medieval Europe, merchant houses played a key role in providing banking services, especially in the thriving Italian city-states of Florence, Venice, and Genoa. Prominent families such as the Bardis and Peruzzis dominated the banking industry in 14th-century Florence, establishing branches across Europe.
Italy's central role in banking was largely due to its position as a hub for international trade between Europe, Africa, and Asia. This economic growth laid the groundwork for the modern banking system.
The word "bank" itself originates from the Italian banco, meaning "bench." In Italy, money changers conducted their transactions while seated at benches. If a money changer went bankrupt, their bench would be broken, giving rise to the term "bankrupt," which literally means "broken bench."
Initially, banks served only aristocrats, rulers, and wealthy merchants. The primary functions of banks at the time included:
· Safeguarding gold and valuable items.
· Lending to rulers for wars or palace construction.
· Financing trade expeditions, such as supporting ships transporting goods from Asia.
Over time, the banking system evolved, becoming accessible not just to the elite.
Further transformation
Then, banking has undergone a remarkable journey of transformation. It evolved from the deposits and loans managed by goldsmiths in 17th-century London and the founding of the Bank of England in 1694 to the rise of powerful financial dynasties like the Rothschilds. The 20th century introduced strict regulations, depositor protections, and groundbreaking innovations such as ATMs, credit cards, and online banking.
Today, digitalization, fintech, and cryptocurrencies continue to reshape the industry, making financial services more accessible and flexible while remaining a cornerstone of the global economy.
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