Banking and Bank Acounts History
Banking in the UK can be traced all the way back to Roman times. During this period banking business was carried out at two levels:
Argentarii
The argentarii were private individuals who carried out the business of banking. Initially their purpose was to exchange coins both local and foreign however they developed into holding money for customers as well as paying and calculating interest on monies owed for their customers. While these early bankers were different to modern day banking, their practices were very similar and sow the roots for modern banking as we know it now. For example, they were allowed to use the money that they held for others for their own profitable purposes, they would also check the value of coins as well as distributing newly minted coins to the population. The argentarii were regarded as the professional bankers of the time in contrast to the Feneratores (see below).
Feneratores
Feneratores were mostly made up of the Roman nobles and elite and could be compared to the modern day private loan company. They would lend their own money and money that others had invested with them to individuals on an interest basis. There was a difference of liability for the money compared to the Argentarii as they were liable for any losses themselves, where as the Feberatores were more like a deposit bank and the risk lay with the borrower.
After the Romans
When the Romans left the UK so did their bank acount system, so over time it was monasteries that took over the responsibilities of becoming the keepers of money however this all changed when the crown dissolved the monasteries in the 1530’s.
The arrival of the English Civil war marked the next landmark influence on modern banking as gentry and aristocrats looked for safe places to keep their money away from the crown, especially when Charles I seized the gold deposited in the tower of London. It was this need for a safe bank acount service that spawned the growth of Goldsmith Bankers in the London area and as such became the foundation of London being a world financial hub. This growth was held back by strong legal controls of these bankers and a high risk structure of “Personal Liability” meaning the bankers were personally liable as individuals for their own losses as a bank could only be owned by a single person.
Times are changing
It was during the 1820s that parliament finally relaxed the laws on the ownership of UK banks and allowed for joint ownership, which allowed for the spread of risk and therefore the growth in banking hubs that today we know as national banks. This decision was partly due to the collapse of a number of prominent banks, and the governments need to provide its people with a lower risk banking service.
Modern Banking
Banks and bank acounts as we know them now have been shaped by many factors, however is it since the second world war that banking has changed the most. It has been a complex journey of banking divisions and legislation that together have allowed the emergence of the Big 5 high street banks and the demise of the traditional building society.
The Golden Years
During the late 90’s and majority of the 2000s the banking industry proved to be a very successful industry, as money markets, financial services and lending spiralled in the UK. This has allowed UK banks to make huge profits for their shareholders and become some of the largest and most powerful organisations in the world.
On Shaky Ground
Size is not always a reflection of stability and today in 2009 we have seen how major banks can collapse due to bad lending decisions and affect the economy of a whole country. Banks are having to turn to the government and the tax payer to keep afloat and you can’t help to ask the question and hear the answer to what our Roman forefathers would think about the modern “Credit Crunch” of 2009.
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