Did New Zealand invent the Banking System?

AucklandAges ago, I was having coffee with a friend of mine (not a hugely unusual occurrence it has to be said), and we were discussing Banks in New Zealand. Now most people know that I don’t really think they are that great. And I have always found it odd that by and large Kiwis think their banking system is the bee’s knees. You will find this especially at Immigration Expos – where I remember them telling us how much more advanced than the UK banking system it was.

But I was gobsmacked when my friend told me that while talking to a Kiwi, she was told that New Zealand had in fact actually INVENTED the banking system.

So, who did invent the banking system? I always thought it was the Templars, with their vast sums of money and preceptories throughout Europe and the Middle east, which allowed people to deposit money in one country, and withdraw it in another using a promissory note – sort of like a Mediaeval Travellers cheque.

Well, according to Wikipedia – that fount of a million things you never knew you needed to know – banking has been around in its simplest form since about 3000 BC. Ancient Babylon developed loans and the Greeks had a system for allowing deposits in one city to be removed in another city. The first individual banker recorded in history is a guy called Pythius, at the beginning of the 5th century B.C In the Aegean, the island of Delos became a centre for banking in the region in 300 BC.

It all went horribly wrong with the Romans: they did well with the administration of banking, and improved the charging and payment of interest, but they liked Cash too much, so banking didn’t work out so well for them.

Banking didn’t come back to Europe till the Crusades, in about 1100 AD. And yes – the Templars did help out a bit J. In the 13th and 14th century – it gets a bit messy – with the papal banks and Italian merchants fighting it out as to who had the best banks at the time, and an English King or two defaulting on loans!

(See its not just the Hoi Polloi who have money worries and can’t pay their debts – the whole downfall of the Templars was due to the king of France running out of money to fund a new war. How about that for a Financial Crisis! “I need some money – I know – let’s torture some Knights for a few years, burn em at the stake and nick their treasury!”)

Essentially at this point – the Italian merchants get into Banking, and in the 15th century in Florence it becomes legal to charge interest (prior to this it was illegal and called Usury).

In the UK funnily enough, banking seems to have started in coffee houses, with the royal exchange opening in 1565.

So there you have it. Whether or not you love or loath the New Zealand banks – they defiantly cannot claim to have invented banking.