Video narration
Why do we call it a bank? Because it started as a bench. In medieval Italy, money changers worked at benches in the market. In Italian, a bench was a banco. And a banker who failed had a banca rotta, a broken bench. That's where the word bankrupt comes from. In Venice, merchants met their banker at the Rialto. Instead of counting out coins, he simply moved the payment from one name to another in his ledger. In Florence, the Medici family opened their bank in 1397, with branches from Rome to London. Their bills of exchange let a merchant pay in Florence and collect in Bruges, without carrying gold across Europe. In Genoa, the Banco di San Giorgio was set up in 1407 to manage the city's debts. A bench, a ledger, a paper promise. Modern banking had begun. Free lesson: Basics of Banking, Topic 7, at Malla Banking Academy. Next: Central Banks and Why They Exist.