The rise of modern banking began in 17th century Europe with the development of formal financial institutions and innovations like the issuance of banknotes which replaced the physical transfer of gold or silver in daily transactions. This era marked a significant transformation.
Bank of Amsterdam (1609): was one of the earliest formal banks, founded to improve currency exchange and offer deposit and loan services. It played a vital role in international trade.
Bank of England (1694): The first central bank, established to manage the debt of the British government, began issuing banknotes, which soon became a central feature of modern banking. These notes represented a promise to pay the holder the equivalent value in gold.
Fractional Reserve Banking: By the 18th century, banks began using fractional reserve banking, holding a fraction of deposits as reserves while lending out the rest. This increased the liquidity in the economy and enabled the banking sector to expand.
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The Birth of Modern Banking (17th to 19th Century)... #shorts #viralshorts
