Giro - History and Concept

History and Concept

Giro systems date back at least to Ptolemaic Egypt in the 4th century BC. State granary deposits functioned as an early banking system, in which giro payments were accepted, with a central bank in Alexandria. Giro was a common method of money transfer in early banking.

The first occurrences of book money are not known exactly. The giro system itself can be traced back to the "bancherii" in Northern Italy, especially on the Rialto (a financial center, resembling the modern day Wall Street). Originally these were money changers sitting at their desk ("bancus" = bench) that customers could turn to. They offered an additional service to keep the money and to allow direct transfer from one money store to another by checking the accounts in their storage books. Literally they opened one book, withdrew an amount, opened another book where the amount was added. This handling was naturally a very regional system but it allowed the money to circulate in the books. This led finally to the foundation of the "Banco del Giro" in 1619 (in Venetian language Banco del Ziro) which gave the blueprint for similar banking systems. The usage in German language can be seen in the Banco del Giro founded in Vienna in 1703 (to extend the financing business that Samuel Oppenheimer had brought from Venice in 1670).

Postal giro or postgiro systems have a long history in European financial services. The basic concept is that of a banking system not based on cheques, but rather by direct transfer between accounts. If the accounting office is centralised, then transfers between accounts can happen simultaneously. Money could be paid in or withdrawn from the system at any post office, and later connections to the commercial banking systems were established, often simply by the local bank opening its own postgiro account.

By the middle of the 20th century, most countries in continental Europe had a postal giro service. The first postgiro system was established in Austria on the early 19th century. By the time the British postgiro was conceived, the Dutch postgiro was very well established with virtually every adult having a postgiro account, and very large and well used postgiro operations in most other countries in Europe. Banks also adopted the giro as a method of direct payment from remitter to receiver.

The term "bank" was not used initially to describe the service. The banks' main payment instrument was based on the cheque which has a totally different remittance model than that of a giro.