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    The concept of bank money originated in Amsterdam in 1609 with the establishment of the Bank of Amsterdam. As an exchange bank, it allowed individuals to deposit money or bullion and withdraw the equivalent value, with transfers of these deposits later known as "bank money." Many early protobanks provided banking services connected to trade and dealt in coin and bullion exchanges. Full-fledged banks emerged in medieval times specializing in depositing and lending money and creating spendable IOUs to substitute for coins.

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    The concept of bank money originated in Amsterdam in 1609 with the establishment of the Bank of Amsterdam. As an exchange bank, it allowed individuals to deposit money or bullion and withdraw the equivalent value, with transfers of these deposits later known as "bank money." Many early protobanks provided banking services connected to trade and dealt in coin and bullion exchanges. Full-fledged banks emerged in medieval times specializing in depositing and lending money and creating spendable IOUs to substitute for coins.

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    The concept of bank money originated in Amsterdam in 1609 with the establishment of the Bank of Amsterdam. As an exchange bank, it allowed individuals to deposit money or bullion and withdraw the equivalent value, with transfers of these deposits later known as "bank money." Many early protobanks provided banking services connected to trade and dealt in coin and bullion exchanges. Full-fledged banks emerged in medieval times specializing in depositing and lending money and creating spendable IOUs to substitute for coins.

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    81 views2 pages

    Research

    Uploaded by

    SukhiGhai
    The concept of bank money originated in Amsterdam in 1609 with the establishment of the Bank of Amsterdam. As an exchange bank, it allowed individuals to deposit money or bullion and withdraw the equivalent value, with transfers of these deposits later known as "bank money." Many early protobanks provided banking services connected to trade and dealt in coin and bullion exchanges. Full-fledged banks emerged in medieval times specializing in depositing and lending money and creating spendable IOUs to substitute for coins.

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    Research

    The concept of bank money originated with the Amsterdamsche


    Wisselbank (the Bank of Amsterdam), which was established in 1609 during
    Amsterdams ascent as the largest and most prosperous city in Europe. As an
    exchange bank, it permitted individuals to bring money or bullion for deposit
    and to withdraw the money or the worth of the bullion. The original ordinance
    that established the bank further required that all bills of 600 gulden or upward
    should be paid through the bankin other words, by the transfer of deposits or
    credits at the bank. These transfers later came to be known as bank money.
    The charge for making the transfers represented the banks sole source of
    income.
    There are records of loans by the temples of Babylon as early as 2000 bce;
    temples were considered especially safe depositories because, as they were
    sacred places watched over by gods, their contents were believed to be
    protected from theft. Companies of traders in ancient times provided banking
    services that were connected with the buying and selling of goods
    Many of these early protobanks dealt primarily in coin and bullion, much of
    their business being money changing and the supplying of foreign and
    domestic coin of the correct weight and fineness. Full-fledged banks did not
    emerge until medieval times, with the formation of organizations specializing
    in the depositing and lending of money and the creation of generally spendable
    IOUs that could serve in place of coins or other commodity moneys. In Europe
    so-called merchant bankers paralleled the development of banking by
    offering, for a consideration, to assist merchants in making distant payments,
    using bills of exchange instead of actual coin
    The earliest genuine European banks, in contrast, dealt neither in goods nor in
    bills of exchange but in gold and silver coins and bullion, and they emerged in
    response to the risks involved in storing and transporting precious metal
    moneys and, often, in response to the deplorable quality of available coins,
    which created a demand for more reliable and uniform substitutes.
    In 600 B.C., Lydias king alyattes minted the first official currency. The coins
    were made from electrum, a mixture of silver and gold that occurs naturally
    and stamped with pictures that acted as denominations. In the streets of Sardis,
    circa 600 B.C., a clay jar might cost you two owls and a snake. Lydias
    currency helped the country increase both internal and external trade, making it
    one of the richest empires in Asia Minor.
    Money travels
    The shift to paper money in Europe increased the amount of international trade
    that could occur. Banks and the ruling classes started buying currencies from
    other nations and created the first currency market. The stability of a particular

    monarchy or government affected the value of the countrys currency and the
    ability for that country to trade on an increasingly international market. The
    competition between countries often led to the currency wars, where competing
    countries would try to affect the values of the competitors currency by driving
    it up and making the enemys goods too expensive, by driving it down and
    reducing the enemys buying power, or by elimination the currency
    completely.
    The first recorded use of paper money was in the 7th century in China.
    However, the practice did not become widespread in Europe for nearly a
    thousand years.
    In the 16th century the goldsmith-bankers began to accept deposits, make
    loans and transfer funds. They also gave receipts for cash, that is to say gold
    coins, deposited with them. These receipts, known as running cash notes,
    were made out in the name of the depositor and promised to pay him on
    demand.
    Reference:
    http://www.britannica.com/EBchecked/topic/51892/bank/273032/Specializatio
    n

    http://www.bankofengland.co.uk/banknotes/Pages/about/history.aspx
    http://www.investopedia.com/articles/07/roots_of_money.asp

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