Quotes/Werner Banking Ancient Sumer

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Richard Werner, New Paradigm in Macroeconomics

Today, historians have demonstrated - though little-known to most economists - that banking came about much earlier, and credit transactions most likely preceded the development of money: 'banking operation... preceded coinage by well over a thousand years, and so did private banking houses by some hundreds of years.' (Davies, 1994, p.49)

Banking was widespread throughout Mesopotamia in the third millnenium BC. Metal coinage was only to be developed much later and elsewhere, in the seventh century BC. Banking thus was a complete substitute for coinage in Sumeria and Babylon, which were basically bank-based credit economies. What is meant with banking here is not some rudimentary Stone Age type of conception, but the very same type of banking transactions that modern banks engage in: deposit banking, unsecured and secured loan operations, bank transfers, giro settlement of debts, bill discounting, foreign exchange- these banking operations are recorded on thousands of cuneiform clay tablets. Babylon was the flourishing banking centre of the region, with advanced financial markets, including financial products such as futures, and legislation regulating financial transactions. Temples, royal palaces and private firms operated banks, which were at the heart of the economy. Bankers' activities extended beyond taking deposits and lending money at interest to include trade, mining, production, and tax farming (the purchase of tax collection privileges from the government, whereby the collectors were remunerated by any excess takings). Bankers funded governments and military campaigns.