| Merchant Banks term is very widely used in | | | | solution was found to be the accepting of |
| Europe and refers to their origin as | | | | these traders' bills by one of the older |
| mercantile houses specializing in the export | | | | well-established firms, for a consideration |
| of British products, particularly cotton | | | | in the form of commission. Gradually the |
| cloth, and the import of any products of the | | | | merchant became a banker specializing in the |
| countries where they were established. This | | | | accepting of bills for other merchants. |
| involved remitting money from one country to | | | | |
| another, and the bill of exchange on London | | | | Afterwards, merchant banks (bankers) started |
| becomes the means of financing the import and | | | | issuing foreign bonds for overseas |
| export trades. The merchants concerned became | | | | governments who lacked capital. The issue of |
| well known as absolutely reliable firms whose | | | | these bonds was only possible if the names of |
| signature on a bill would make it readily | | | | famous houses appeared in association with |
| discountable on the money market. | | | | the issue. The merchant banks (bankers) |
| | | | arranged for a quotation on the London Stock |
| The change to banking developed as the number | | | | Exchange and handled the issues which were |
| of firms trading with overseas territories | | | | subscribed for by British and overseas |
| increased. Many of these new firms found that | | | | investors. Today the issue of "Eurocurrency" |
| they respect and trust enjoyed by the | | | | and "Petrocurrency" bonds is again becoming |
| well-established houses, so that their bills | | | | an important activity for merchant banks. |
| of exchange were less readily discounted. The | | | | |