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The History of Banks | How They've Changed through the Years
Banks Between The 17th And The 19th Century
- London was where the biggest action was in the banking world, with the Goldsmiths of London being the first proper bank. Services like vaults, bank debts, deposits (made inside the bank) and loans became popular.
- Banknotes were first offered by the Bank Of England and were called promissory notes. Soon other services like cheques and overdrafts followed.
- The Rothschilds started their financing business in the 19th century, eventually becoming the richest family in history.
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SIMILAR ARTICLES & IDEAS:
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Key Ideas
The Birth Of The Credit Card
- The concept of a multiple-establishment credit card came in the mind of Frank X. McNamara in 1949, when he had forgotten his wallet and was unable to pay for his dinner at a fancy restaurant...
Convenience In The Pocket
The initial card offered by Diners Club didn’t involve revolving credit, and the dues were to be paid off in full by the end of the month. The credit cards that we see now came much later.
Initially targeted at salespeople, the company started charging a $3 annual fee and also charged the establishments 7 per cent for each transaction. The paper-based cards showed tremendous growth in a year, with 20,000 people using it.
Status Symbol
Eventually, the Diners Card became a status symbol and more and more establishments began to trust it. The company printed a list of participating merchants for the help of the members.
Innovative ideas, like associate cards for married women who wanted to shop in the afternoon using their husbands money became popular.
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Paper Money
The instruments of trade and finance, like paper money, are groundbreaking inventions, put to use by collective acceptance using authority and seals of trust.
Money's Worth
The financial crisis of 2008 showed that the system can buckle anytime and money may not always be worth the same.
As we get hyper-connected, the state-backed authority of currency, and what Money is really worth, is being rethought. Society has historically tried to invent new forms of currency, most recent being Bitcoin, a cryptocurrency.
The Idea of Libra Currency
The idea of Facebook's Libra, an attempt to create a new currency made from the architecture that powers Bitcoin, is that the value of new money is not derived from state authority, but a combination of mathematics, global connectivity, and trust that resides in people using Facebook.
A financial crisis
A financial crisis is often associated with a panic or a bank run where investors sell off assets or withdraw money from savings accounts.
- Asset prices drop in value.
- Consu...
Causes of a financial crisis
Generally, a crisis is caused if institutions or assets are overvalued, and can be worsened by panic and herd-like investor behaviour.
Contributing factors include systemic failures, unexpected or uncontrollable human behaviour, regulatory absence or failures, or contagions that is like a virus that spread from one institution or country to the next. If left unchecked, an economic crisis can cause a recession or depression.
Financial crisis examples
- The Stock Crash of 1929. On Oct. 24, 1929, share prices collapsed after a period of wild speculation and borrowing to buy shares. It led to the Great Depression, which was felt worldwide. One trigger of the crash was a drastic oversupply of commodity crops, which led to a steep decline in prices.
- The 20007-2008 Global Financial Crisis. This was the worst economic disaster since the Stock Market Crash of 1929. It started with a subprime mortgage lending crisis in 2007. Then it moved into a global banking crisis with the failure of investment bank Lehman Brothers in September 2008.