It is understood that early banking was invented around 2,000 BC by Babylonian priests who stored people’s gold for a fee and gradually they realised that they could lend some of that gold to others and earn interest. Eventually, the system of modern banking was developed in Lombardy in Italy in the twelfth and thirteenth centuries where moneylenders worked on wooden benches to encourage people to save with them and to take out loans. Indeed, the name ‘bank’ comes from the Italian word for ‘bench’. And if the moneylenders cash ran out then the bench would be broken in half and business would cease. The rotten bench was declared banca rotta from where we get the word ‘bankruptcy’.
Banks are a remarkable invention as they serve various functions in the community. Their first function is to store money on behalf of other people. These are people who deposit their money in the bank and assume that it will be kept safe. Today, much of that money is stored digitally as in the past ten years the use of actual cash has diminished in British society by seventy percent. The best example of a bank holding vast fortunes in Britain is the Bank of England which today stores about 400,000 bars of gold worth £200 billion. It amounts to a fifth of all the gold in the world and if each bar was stacked on top of each other the height would be the equivalent to forty-six Eiffel Towers. The gold covers over 300,000 square feet which is the equivalent of ten football fields.