Banking

1. What is Bank?
- A bank is a financial institution that accepts deposits from

individuals and businesses and provides various financial services,
such as loans, mortgages, investment products, and payment
services. Banks play a crucial role in the economy by facilitating
the flow of money and credit. They act as intermediaries between
depositors who have excess funds and borrowers who need funds
for various purposes. Banks also offer services such as checking
and savings accounts, credit cards, wealth management, foreign
exchange, and electronic funds transfer. They are regulated by
government authorities to ensure the safety and soundness of the
financial system and to protect the interests of depositors.
2. What is financial institution?

- Financial institutions are organizations that provide financial
services to individuals, businesses, and governments. These
institutions play a crucial role in the economy by facilitating the
flow of funds between savers and borrowers. They help in the
allocation of resources, managing risks, and providing various
financial products and services.
3. How does the bank started?(History)
- Banking’s Early Beginnings
The origins of banking can be traced back to ancient Mesopotamia, around

2000 BCE, where the first known form of lending took place. Temples, often
considered the earliest banks, served as repositories for valuable items and
grain, and priests would lend these resources to local farmers and merchants.
The temples were also responsible for keeping records of these transactions,
giving birth to the concept of bookkeeping. In ancient Greece, the concept of
banking further evolved with the establishment of moneylenders and private
depositories. Around 600 BCE, the Greek city-state of Athens introduced the
first standardized coinage system, which facilitated trade and contributed to the
growth of banking activities. The Romans, too, played a significant role in the
development of banking. They established a network of banks throughout their
empire and introduced financial innovations such as bills of exchange, which
allowed for the transfer of funds between different locations.
- Medieval and Renaissance Europe
The fall of the Roman Empire in the 5th century led to a decline in banking
activities, but they re-emerged in medieval Europe during the 12th and 13th
centuries. The Knights Templar, a religious military order, provided secure
storage for valuables and facilitated the transfer of funds for pilgrims traveling
to the Holy Land. Their financial network laid the groundwork for modern
banking practices. The Italian city-states of Florence, Venice, and Genoa
emerged as major banking centers in the 14th and 15th centuries. The Medici
family of Florence, who established the Medici Bank, was instrumental in
popularizing the double-entry bookkeeping system, which remains a
cornerstone of accounting practices today. The birth of modern banking is often
attributed to the founding of the Bank of Amsterdam in 1609. It functioned as a
central bank, stabilizing the value of the local currency and serving as a model
for other central banks, such as the Bank of England (1694) and the Sveriges
Riksbank (1668).
- The Expansion of Banking
The 17th and 18th centuries marked the growth of banking in Europe, with the
establishment of banking dynasties such as the Rothschilds and Barings. Joint-
stock banks, which allowed investors to buy shares and participate in profits,
also began to emerge during this period. Banking expanded to the New World
with the founding of the Bank of New York in 1784 and the First Bank of the
United States in 1791. American banking further developed in the 19th century
with the creation of state-chartered banks and the establishment of the Federal
Reserve System in 1913, which aimed to maintain financial stability and serve
as the central banking authority in the United States.
- Innovations and the Evolution of Banking
The 19th and 20th centuries saw rapid technological advancements that
significantly impacted the banking industry. The introduction of the telegraph in
the 1840s enabled faster communication between banks, while the invention of
the telephone in the 1870s further revolutionized communication and allowed
for the creation of the first wire transfers. The advent of new technologies, such
as ATMs, electronic payments, and online banking, revolutionized the banking
industry in the latter half of the 20th century. These innovations made banking
more convenient and accessible to consumers, while also improving efficiency
and reducing costs for banks. The globalization of the banking industry in the
late 20th century also brought about significant changes, as banks expanded
their reach beyond national borders and began to offer new services such as
international payments and currency exchange. Today, we have digital
currencies, something bankers of ancient times probably would not have been
able to comprehend.
4. How does money and gold interconnected?
- Money and gold have been interconnected throughout history,

and gold has played a significant role in the development of
money as a medium of exchange. Here are somes in which money
and gold are interconnected:
1. **Historical Use as Money**: Gold has been used as money for
thousands of years due to its durability, divisibility, portability, and
scarcity. It served as a medium of exchange and a store of value
in many ancient civilizations.
2. **Gold Standard**: In the past, many countries operated on a

gold standard where the value of their currency was directly
linked to a specific amount of gold. This meant that the currency
could be exchanged for a fixed amount of gold.
3. **Gold Reserves**: Central banks and governments hold gold

reserves as part of their foreign exchange reserves. These gold
reserves provide stability and confidence in the value of a
country's currency.
4. **Gold as a Hedge**: Gold is often seen as a safe-haven asset

and a hedge against inflation and economic uncertainty. Investors
may hold gold as a store of value during times of market volatility.
5. **Gold-backed Currency**: Some currencies, such as the U.S.

dollar before1971, were backed by gold reserves. This meant that
the currency could be exchanged for a specific amount of gold
held by the government.
6. **Gold in Financial Markets**: Gold is traded in financial

markets as a commodity and as a form of investment. The price
of gold can influence currency values and financial markets. While
the direct link between gold and money has diminished over time
with the abandonment of the gold standard by most countries,
gold still holds a significant place in the global economy as a
valuable asset and a symbol of wealth and stability.
ASSIGNMENT
IN
BANKING AND FINANCIAL INSTITUTION
SUBMITTED BY:
TRIXIE JANNE A. BABON

OAT - 1B
SUBMITTED TO:
Maria Alyssa Claire B. Capate

Banking

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1. What is Bank?

- A bank is a financial institution that accepts deposits from

2. What is financial institution?

3. How does the bank started?(History)

- Banking’s Early Beginnings

The origins of banking can be traced back to ancient Mesopotamia, around

- Medieval and Renaissance Europe

- The Expansion of Banking

- Innovations and the Evolution of Banking

4. How does money and gold interconnected?

- Money and gold have been interconnected throughout history,

2. Gold Standard: In the past, many countries operated on a

3. Gold Reserves: Central banks and governments hold gold

4. Gold as a Hedge: Gold is often seen as a safe-haven asset

5. Gold-backed Currency: Some currencies, such as the U.S.

6. Gold in Financial Markets: Gold is traded in financial

BANKING AND FINANCIAL INSTITUTION

TRIXIE JANNE A. BABON

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