By Ramon Vasconcellos

The practices of modern banking owe much to financial innovations either borne out of the Italian Renaissance or modified during the era . These adoptions , though not always the creations of the great banking families of Medici and Sforza , facilitated commerce across the continent while further enriching these dynasties . Italian merchants and overseas traders — recognizing the need for more streamlined measures necessary in the simplification of trade — indirectly devised improvements in banking . At the

Illustration of Piazza Santa Croce , Florence , Italy , 1688 . time , modernizations in terms of financial record-keeping , the use of bills of exchange , innovations adopted to circumvent Catholic Church prohibitions against charging interest and the expansion of bank credit established financial practices extant to global and domestic banking .

One such practice , the advent of “ double-entry ” bookkeeping , whose earliest adoptions are traceable to the late 13th century , became formalized in Genoa by 1340 . There , an elected group of professionals responsible for the regulation of commercial affairs known as the “ Masari of the Commune ” kept annual records of cash transactions using the double-entry method . Merchants in Florence during the period also kept their ledgers in a doubleentry format . Prior to these mid-14th century adoptions , parchment notations usually kept track of financial transactions with entries often written in paragraph form absent any chronological order . Most early recordings utilized Roman numerals with transactions identified in multiple currencies with little effort directed toward “ balancing ” the books .

However , by the mid-14th century , many Genoese , Florentine and Venetian merchants had implemented a system of “ debits ” and “ credits ,” adjustments to accounts , for clarity in transactions . Entries were made applying a format called all veneziana ( meaning “ in the Venetian way ”) whereby credits were separated from debits on two folio sides facing each other when the account book was open . For keeping track of a series of transactions , or “ accounts ,” merchants employed this tabular format known as the “ T-account .” Debit entries were placed on the left side of the ledger with credits recorded on the right . This practice would become the standardized method of recording business transactions fundamental to contemporary financial reporting .

The official standardization of the double-entry system and its use of debit and

32 FINANCIAL HISTORY | Winter 2025 | www . MoAF . org