The modern banking system, originating in 1644, shifted financial risks to the public while reserving profits for private shareholders. The first central bank, the Bank of Amsterdam, was followed by the Swedish Riksbank in 1668. By 1694, England established the Bank of England under King William III to finance its navy and the East India Company. The system relied on government-issued bonds backed by tax revenue, which the Bank of England used as collateral to print money. This money supplied private banks, enabling them to lend further and fueling economic growth.

This system created a credit supply chain where governments produced money, central banks distributed it, and private banks profited. The financial framework, designed by bankers, ensured their interests were prioritized, leading to a public loss-private gain dynamic: taxpayers shouldered the risks, while private institutions reaped rewards. This innovation transformed England into a global power within a century but entrenched inequalities in financial systems worldwide.

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