What is a bank?

A bank is a place of business dealing in money and credit. It accepts and cares for currency belonging to its depositors(customers). The bank uses the money to make loans and investment and usually pays the depositor interest for the use of his fund. (Compton’s Encyclopedia, Vol. 3)

Importance of History

•Much of what we see today is the product of ‘history’ •The evolution of banks, trade, economic, political and social development are all intertwined•The evolution of banking is inextricably linked to the development of the global economy especially in trade, industrial development and infrastructure

Safe in the Temple: 18th century B.C

Wealth compressed into the convenient form of gold brings one disadvantage. Unless well hidden or protected, it is easily stolen.

In early civilizations a temple is considered the safest refugeIn Egypt and Mesopotamia gold is deposited in temples for safe-keepingIn Babylon at the time of Hammurabi, in the 18th century BC, there are records of loans made by the priests of the temple. The concept of banking has arrived.  

Greek and Roman financiers: from the 4th century BC

Banking activities in Greece are more varied and sophisticated than in any previous society.Rome, with its genius for administration, adopts and regularizes the banking practices of Greece. By the 2nd century AD a debt can officially be discharged by paying the appropriate sum into a bank, and public notaries are appointed to register such transactions.The collapse of trade after the fall of the Roman empire makes bankers less necessary than before, and their demise is hastened by the hostility of the Christian church to the charging of interest. Usury comes to seem morally offensive.

Religion and banking: 12th - 13th century AD

The Christian prohibition on usury eventually provides an opportunity for bankers of another religion.The Jews, barred from most other forms of employment, supply this need. But their success, and their extreme visibility as a religious sect, brings dangers.The same is true of another group, the knights Templar, who for a few years become bankers to the mighty. They too, an exclusive sect with private rituals, easily fall prey to rumour, suspicion and persecution.

Bankers to Europe's kings: 13th - 14th century AD

During the 13th century bankers from north Italy, collectively known as Lombards, gradually replace the Jews in their traditional role as money-lenders to the rich and powerful. The business skills of the Italians are enhanced by their invention of double-entry book-keeping. Siena and Lucca, Milan and Genoa all profit from the new trade. But Florence takes the lion's share.Florence is well equippped for international finance thanks to its famous gold coin, the florin, first minted in 1252. By the early 14th century two families in the city, the Bardi and the Peruzzi, have grown immensely wealthy by offering financial services.In the 1340s Edward III of England is engaged in the expensive business of war with France, at the start of the Hundred Years' War. He is heavily in debt to Florence, having borrowed 600,000 gold florins from the Peruzzi and another 900,000 from the Bardi. In 1345 he defaults on his payments, reducing both Florentine houses to bankruptcy.  

The Fugger dynasty: 15th - 16th century AD

The Medici triumph as dukes of Florence. But their role as leading bankers is usurped by a German dynasty, that of the Fuggers. The Fuggers use their wealth responsibly, as can still be seen in the Fuggerei - a community for the poor, built in Augsburg in 1519 (the year of the imperial election) and still in use today. By the end of the 16th century the family withdraws from financial risk-taking, after some disastrous ventures, and settles into the more conventional aristocratic existence which their wealth has bought. In 1587 the Banco della Piazza di Rialto is opened in Venice as a state initiative. Its purpose is to carry out the important function of holding merchants' funds on safe deposit, and enabling financial transactions in Venice and elsewhere to be made without the physical transfer of coins.

The Rothschild dynasty: AD 1801-1815

One of the most prominent German banking families in the mid- 1700s. They found that superior information could make the difference between massive profits and losses.The Rothschild bank dealt in bills of exchange and made various kinds of loans.

EARLY BEGINNING

Banking in the Philippines had its beginning as early as 1830.The Bank of the Philippine Islands (1851),the Chartered Bank of India, Australia and China (1873), the Hongkong and Shanghai Banking Corporation 91876), the Monte de Piedad and Savings Bank (1882), were the commercial banks established during the Spanish regime.

DURING THE AMERICAN REGIME

The Philippine Legislature enacted on February 4, 1916, a law creating the Philippine National Bank.The organization of the Philippine National Bank was immediately set up on June 16, 1916.

BANKS AT THE TIME OF THE OUTBREAK OF THE WAR

The Japanese military occupation in 1941-1945 briefly restructured Philippine banking.Only the Japanese and their Filipino symphatizers were allowed to operate banks

BANKS AFTER THE LIBERATION

In 1946, after the independence, the origins of our modern banking system were established.Prewar banks were reopened and resumed operations.The Central Bank Act was passed in 1948

The BSP Monetary Board

 

Chairman Amando M. Tetangco, Jr. 

   

Members Cesar V. Purisima 

 

Juanita D. Amatong 

Nelly Favis-Villafuerte

Alfredo C. Antonio 

Ignacio R. Bunye

Peter B. Favila

GENERAL FUNCTIONS OF BANKS

1. To accept and guard deposits of money

2. To lend money.3. To remit and collect money.4. To perform legal roles like

supervising a business, managing a private financial estate, receiving property being contested in court.

(Living Economics, Sonia Zaide)

CREDITS TO SOURCES AND REFERENCES

http://www.newworldencyclopedia.org/entry/Bankhttp://projects.exeter.ac.uk/RDavies/arian/origins.html#inventionhttp://www.authorstream.com/Presentation/Miguel-24317-HM2-BRIEF-HISTORY-INTERNATIONAL-BANKINGChapter-2Business-4039-Banking-Early-first-ref-as-Entertainment-ppt-powerpoint/http://www.historyworld.net/wrldhis/PlainTextHistories.asp?groupid=2453&HistoryID=ac19&gtrack=pthcZaide, Sonia. Living Economics 2nd Edition.Quezon City.ALL NATIONS Publishing Co., Inc.2002, pp100-111.Compton’s Encyclopedia, Vol. 3