Bank

The mental image most people carry — a vault in a basement holding your cash in a box with your name on it — is wrong. When you deposit money it joins the bank’s general holdings, and the bank writes a line in its ledger recording that it owes you that amount. Your balance is that line: a promise, not a pile.

Everything a bank does is notebook work. Deposits are lines written, payments are lines updated and settled between institutions, and loans are new lines created.

The word itself comes from banca, Italian for the bench where medieval money changers worked. A banker who could not pay his customers had his bench broken — banca rotta — which is the origin of “bankrupt”.

Because the whole arrangement rests on trust in a single institution’s notebook, states eventually added deposit insurance to stop that trust from cracking.