The History of the Banking System

Banking didn't begin with coins or computers, but with grain in ancient Mesopotamia. In temples, priests acted as secure custodians for surplus harvests and precious metals, creating the first banks. But lending quickly followed, and with it, the need for rules. Around 1754 BCE, King Hammurabi of Babylon created some of the world's first major financial regulations. His code, carved into a black diorite stele for all to see, set hard caps on interest. Lenders could charge no more than 33.3% for grain loans, and 20% for silver. The code even included a force majeure clause, cancelling interest payments if a flood destroyed a farmer’s crop. These early transactions were all tracked on simple clay cuneiform tablets, the world's first accounting ledgers.