All Italian scholars insist that the origins of modern international finance arose among the Italian city-states that eventually established self-rule during the centuries following the collapse of the Roman Empire in the West (Fratianni and Spinelli 2006). Italian merchants perfected the foreign bill of exchange to finance trade throughout medieval Europe into the North and Baltic Seas, as well as with the ancient ports of the Mediterranean and Black Seas. Their home cities also developed the precursors of sovereign debt in the form of perpetual annuities. Both financial instruments – the bill of exchange and perpetual annuities – have been studied in terms of the way they circumvented the religious prohibitions on usury in Christian Europe (de Roover 1963; Munro 2013), but our emphasis here will be on the way they interacted to create viable and effective markets in international finance. The innovative pressures of war finance for the Italian city-states throughout the Middle Ages were critical for the development of new financial instruments and techniques. Their usefulness in promoting the expansion of trade and production in non-military pursuits after the religious wars of the sixteenth and seventeenth centuries led to the further rise of financial capitalism, first in the Low Countries and then in Great Britain (Chapter 4).

But which of the several Italian city-states that emerged on the peninsula after the demise of the Roman empire and then the division of Charlemagne's Holy Roman Empire should claim pride of precedence? Florence has long held sway, thanks to the stunning art and public monuments financed by the fabulous Medici family during the Renaissance, and whose bank was extolled by de Roover (1963). Later economic historians have asserted the greater importance of Venice, which remains a comparable tourist attraction to Florence (Lane and Mueller 1985; Mueller 1997; Pezzolo 2013a, 2013b). The role of Genoa's Casa di San Giorgio, however, has recently taken pride of place (Felloni 2006; Fratianni and Spinelli 2006; Marsilio 2013). While acknowledging its significance, this chapter will make an argument for the financial innovations made by the crusading popes of the Middle Ages (cf. Caselli 2008, 2013).