Financial Blog

Anders: The 'system' of 'fractional reserve banking'

"Banking." The name comes from the business of the "money changers" who sat on benches (German: "banks") in the temple plaza in Jerusalem. They'd exchange the foreign coins of the pilgrims who wanted to pay the half-shekel "Temple tax," which had to be paid as the silver coin issued by the Temple.

Silver has always been a rare metal. As such it has intrinsic value. It is tarnish resistance and antibacterial, easy to mold and stamp into coins of assured weight, which makes it ideal for use in trade. From times immemorial silver has been used as medium of exchange in many places of the world.

Where silver is plentiful, the goods exchanged for it are expensive; where silver is rare trade goods are cheap.

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