Egyptians and Babylonians
Foreign exchange dealing can be traced back to the early stages of history, possibly beginning with the introduction of coinage by the ancient Egyptians, and the use of paper notes by the Babylonians.
In ancient times in Jerusalem, pilgrims visiting the Jewish Temple on Jewish Holy Days would change some of their money from the standard Greek and Roman currency for Jewish and Tyrian money, as the latter two were the only ones accepted as payment inside the Temple. With this Temple money the pilgrim would purchase a sacrificial animal, usually a pigeon or a lamb, in preparation for the following day’s events.
Jesus casting out the money changers at the Temple | Source: Wikipedia.com, Full size picture
During the middle ages in Europe, many cities and towns issued their own coins, often carrying the face of a ruler, such as the regional baron or bishop. When outsiders, especially traveling merchants, visited towns for a market fair, it became necessary to exchange foreign coins for local ones at local money changers. Money changers would assess a foreign coin for its type, wear and tear, and validity, then accept it as deposit, recording its value in local currency. The merchant could then withdraw the money in local currency to conduct trade or, more likely, keep it deposited: the money changer would act as a clearing facility.
Transfer Order of Funds
In the market, most large transactions were done not by cash or coins, but by transfer order of funds on the books kept at the local money changers. After a market or fair ended, merchants gathered at the local money changers and withdrew their deposit in their own respective currencies. The rates of exchange between different foreign currencies and the local one were fixed between the opening and the closing days of the market.
Knights Templar playing chess, 1283. | Source: Wikipedia.com, Full size picture
As the size and operations of money changers grew they began to provide a lending facility, by adding the lending fee to the foreign exchange rates. Later the Knights Templar provided this service to pilgrims traveling to and from the Holy Land.
In the Bible, Jesus becomes angry at the money changers. I hope His wrath was directed at the poor exchange rates and not the profession itself!
In the Middle Ages, foreign exchange became a function of international banking with the growth in the use of bills for exchange by the merchant princes and international debt papers. This was driven by the budding European powers in the course of underwriting the period’s wars. By the end of the Renaissance, money and currency trading were the lifeblood of most civilized nations.
Don’t exchange money with knights templars.
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