A bank is a financial institution that accepts deposits from the public and creates credit. The credit activities can be carried out directly or indirectly through the capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking, by virtue of which banks have liquid assets equivalent to only a portion of their current liabilities. In addition to other regulations aimed at guaranteeing liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.
Banking in its modern sense evolved in the fourteenth century in the prosperous cities of Renaissance Italy, but in many ways it was a continuation of the ideas and concepts of credit and loans that had their roots in the ancient world. In the history of banking, several banking dynasties, especially the Medici, the Fuggers, the Welser, the Berenbergs and the Rothschilds, have played a central role for many centuries. The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg Bank.
Banking began with the first prototype banks of merchants of the ancient world, who gave grain loans to farmers and merchants who transported goods between cities and this system is known as a barter system. This began around 2000 BC in Assyria and Babylon. Later, in ancient Greece and during the Roman Empire, temple-based lenders made loans and added two important innovations: they accepted deposits and exchanged money. The archeology of this period in ancient China and India also shows evidence of money lending activity.
The origins of modern banking can be traced back to medieval and early Renaissance Italy, to the rich cities of central and northern Italy such as Florence, Lucca, Siena, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, created by Giovanni di Bicci de 'Medici in 1397. The first known state deposit bank, Banco di San Giorgio (Bank of San Jorge), was founded in 1407 in Genoa, Italy .