The Italian city-states of Florence, Venice, and Genoa emerged as major banking centers in the 14th and 15th centuries.
The birth of modern banking is often attributed to the founding of the Bank of Amsterdam in 1609. It functioned as a central bank, stabilizing the value of the local currency and serving as a model for other central banks.
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Role of Banks in Economic Growth:
Banks, according to Smith, played a vital role in channelling savings into productive investments
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Importance of Competition:
He believed that competition among banks would lead to efficiency and innovation
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Risk Management:
He emphasized the need for banks to carefully assess the creditworthiness of borrowers and manage their exposure to risk
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Role of Government Regulation:
Smith recognized the need for some degree of regulation in banking