Giro Accounts

a form of clearing operations involving a set group of people engaged in commerce.

Giro accounts first came into existence in the 16th century in Italy as a result of the adulteration by monarchs and sovereigns of the silver and gold coins of their own mintage. Giro accounts were introduced by giro banks and proved to be a more convenient and less labor-consuming method of settlement of accounts than payment in hard cash (bank notes not yet existing at that time). This form of payment sped up the time and reduced the cost of settling accounts. In the 17th and 18th centuries giro accounts became widespread in a number of countries of Western Europe, especially in Germany, Holland, and France. Originally, giro accounts were common among clients of a single bank within a city or district. Later, the number of participants increased as a result of the establishment of correspondent connections between banks dealing with such operations in different cities or even countries. As the banking business developed, other forms of clearing operations grew out of giro accounts and spread to all countries, a process that was greatly conducive to the saving of cash and to the growth of capitalist production and trade. In the broad sense, all clearing operations realized by means of clearing checks are now known as giro accounts.