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goldsmith banking system (G2)<br />The seventeenth-century beginnings of modern commercial banking in the City of London. Goldsmiths who accepted personal and business gold holdings also lent out such deposits until they discovered that only a certain proportion of deposits would be reclaimed in a particular period and so it was possible to lend by granting loans in the form of deposit receipts. This was, in effect, the beginning of the FRACfiONAL RESERVE BANKING system.

<strong>Reaffirmation</strong> – A borrower' s acknowledgment of a loan repayment obligation, including all principal, interest, and other costs, in a legally binding manner.

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