Historical Evolution of Financial systems

1
Ancient practices
(3rd millennium BC)
Loans: for consumption needs and
for agricultural financing (from
- Financial landlords to tenants)
instruments: Gold and silver
coins Mortgages: combination of a loan
Metals or metallic >>
Loans, and mortgages and an insurance contract (mainly
used for foreign trade financing)
- Financial
intermediaries: Another function: use
Main functions: to accept
mortgages for foreign trade
Money changers and deposits and make loans
financing
banks

- Financial markets:
Markets where mainly occurred the
activities of borrowing and domestic
transactions for individuals.
 Historical Evolution of Financial systems

1 2
Ancient practices Italian bankers
(3rd millennium BC) (1200)

- Financial
instruments:
+ Metals or metallic >>
Loans, and mortgages

- Financial
intermediaries:
+ Money changers and
banks

- Financial markets:
Markets where mainly occurred the
activities of borrowing and domestic
transactions for individuals.
 Historical Evolution of Financial systems

2
Italian bankers
(1200)
Financial instruments became more varied, and
- Financial instruments:
new financial instruments appeared
+ Trade credits, Mortgages, debt, claims
+ Bills of exchange (debt instruments) The innovation of bills of exchange opened up
+ Government and Corporate securities (equity-like the way to banks in a modern sense
instruments)
+ Insurance (maritime insurance and life insurance)
- Financial
(1) transferring money associated with international trade and the
intermediaries: Roman Catholic Church.
+ Early types of banks (2) establishing networks in Europe.
+ Insurance companies
- Financial markets
pay for suffered damages due to maritime insurance and life insurance
+ Developed international trade
+ Government and companies join trading and transferring.
+ there was a de facto discount and Informal markets
appeared
 Historical Evolution of Financial systems

1 2 3
Ancient practices Italian bankers Dutch finance
(3rd millennium BC) (1200) (1600s)
- Financial - Financial instruments:
instruments: + Trade credits, Mortgages, debt, claims
+ Metals or metallic >> + Bills of exchange (debt instruments)
Loans, and mortgages + Government and Corporate securities (equity-like
instruments)
- Financial + Insurance (maritime insurance and life insurance)
- Financial
intermediaries:
+ Money changers and
intermediaries:
banks + Early types of banks
+ Insurance companies
- Financial markets:
- Financial markets
Markets where mainly occurred
the activities of borrowing and + Developed international trade
domestic transactions for + Government and companies join trading and transferring.
individuals + there was a de facto discount and Informal markets
appeared
 Historical Evolution of Financial systems

3
Dutch finance
(1600s)
- Financial instruments:
+ Options & futures contracts (Derivatives)
+ Commodities (Derivatives)
+ Securities
- Financial intermediaries:
+ The main purpose was to facilitate payments.
+ Central banks (such as The Bank of Amsterdam) + Commercial banks took deposits and made exchanges,
+ Commercial banks but in general did not provide credit.

- Financial markets
+ Financial markets became Amsterdam Bourse – The first formal stock exchange- a
more formalized commodities & securities market in Amsterdam
 Historical Evolution of Financial systems

1 2 3
Ancient practices Italian bankers Dutch finance
(3rd millennium BC) (1200) (1600s)
- Financial - Financial instruments: - Financial instruments:
instruments: + Trade credits, Mortgages, debt, claims + Options & futures contracts
Metals or metallic >> + Bills of exchange (debt instruments) + Commodities
Loans, and mortgages + Government and Corporate securities (equity-like + Stocks & bonds
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instruments)
- Financial + Insurance (maritime insurance and life insurance) - Financial intermediaries:
intermediaries: - Financial + Central banks
Money changers and intermediaries: + Commercial banks
banks + Early types of banks
- Financial markets
- Financial markets: + Insurance companies
Markets where mainly - Financial markets + Financial markets became
occurred the activities of more formalized
+ Developed international trade
borrowing and domestic + Government and companies join trading
transactions for individuals and transferring.
+ there was a de facto discount and Informal
markets appeared