The Origin of Money Exchange and Banking

Trade was a fundamental aspect of the ancient world. The insistence of ancient cities to issue their own coinage meant that merchants who wanted to trade with another city had to go to a money changer before any business could be done.

   The presence of pottery and precious goods such as gold, copper, and ivory, attests to the exchange network which existed between the Kingdom of Lydia, in Asia Minor, the Greek mainland and islands such as Crete, Cyprus, and the Cyclades, Italy, and Egypt.

   International trade grew from 750 BCE, and contacts spread across the Mediterranean areas driven by social and political factors such as population movements and the spread of coinage.

   Money changers of that time earned their keep by charging a fee for exchanging one currency for another. For instance, maritime loans enabled traders to pay for their cargoes and the loan did not have to be repaid if the ship failed to reach safely its port of destination.

   However, to compensate the lender for this risk, interest rates could be from 12.5% to 30%. Also, the ship itself was often the security on the loan. There were other taxes too, such as road taxes with a 10% transit charge on Black Sea traffic payable to Athens.

Agora and Bankers

In ancient Greece markets operated within the Agora and in ancient Rome the Forum. These markets typically occupied a place in the town's center. In Greece, in the agora of every city, moneychangers called τραπεζίται (trapezitai) could be found at their distinctive tables touting for business. They were the ancient form of bankers, and the term τραπεζίται arose from their use of τράπεζαι (trapeza).

   As for their activities during the 5th century BCE, they provided a variety of services, primarily money-changing, providing interest payments on deposited monies, pawnbroking, acting as notaries, and the safe guarding of valuables. They accepted deposits and made and took payments from individuals. It is important to mention that competition was steep, with each attempting to offer better rates of exchange than other bankers.

   The innovation of banking has revolutionized trade and made Athens and its port of Piraeus the most important mercantile centers in the Mediterranean.