The Evolution Of Banking
(Muhammad Unza Farooqui, Karachi)
Accounting for trillions in
assets worldwide, the banking system is a crucial component of the global
economy. While money-changing and money-lending may be as old as money, banking
dates back to 15th century medieval Italy, and played a major role in the rise
of the Italian city-states as world economic powers. Ever since, the health of
an economy and the health of its banks have been interrelated; the global credit
crisis, precipitated by the collapse of the subprime-fueled U.S. housing bubble,
is only the most recent example.
Banks are just one part of the world of financial institutions, standing
alongside investment banks, insurance companies, finance companies, investment
managers and other companies that profit from the creation and flow of money. As
financial intermediaries, banks stand between depositors who supply capital and
borrowers who demand capital. Given how much commerce and individual wealth
rests on healthy banks, banks are also among the most heavily regulated
businesses in the world