February 17 2011
The Medici Bank
During the time of the Renaissance there were many advances and going on in Florence and at the center of one of the industrial movements was banking. This movement was spurred on and enhanced by one of the most powerful families during that time. The Medici family. The Medici family was responsible for supplying the world with four popes, two queens of France, and they controlled Florence, with a few interruptions, for almost 400 years.
One of the more famous things the Medici family is responsible for is the forming and rise of the Medici Bank. Founded by Giovanni di Bicca de’ Medici in 1397. Giovanni had managed a bank in Rome before moving to Florence. The Medici Bank lasted up until 1494, when it collapsed due to depression, internal strife and French aggression. Fortunately the Medici Bank kept excellent records and could later be used by other banking organizations and a building stone for their banks.
While the Medici family were not the great innovators of the Renaissance like many people are famous for in this time, they did however use techniques that were being newly developed in Italy to the advantage, for instance double entry accounting. Which even as technology has advanced, the double entry accounting and bookkeeping is still being used widely on an electronic scale by just about all banks. Currently under GAP regulations in order to be certified by GAP a financial institution is required to use double entry accounting vs. the cash accounting system that was used before this point.
Also they used bills of exchange which in today’s system are still used, but are more commonly referred to as receipts.
Like the modern banks of today the Medici bank conducted business just the same, by holding deposits, giving loans, exchanged currency, and had many other workings…...