Finance has had its root in human history since human being started a settled civilized life. As production for trade took a shape, various means of transactions and storage of value kept on evolving. Gradually, finance took the center stage with the evolution of modern capitalism. In early stages the financial instruments remained a scattered individual means of financial practice, no central regulation existed in the early era. Hence the acquaintance with these instruments was also confined to individual users, the traders, particularly. Since economic productivity was quite low, ordinary individuals had little surplus to save, not many had much to do with financial literacy. The modern capitalism required industrial workers, surplus of agricultural products, more consumers for market, more means of production to produce trade surplus and more financial savings and instruments to channelize investments. Also the producers were required to be alienated from the product of labour so that the trade of commodities could be taken in control by the trading class. Also the means of production, which was otherwise the ownership of the households, was to be turned marketable to facilitate the transfer the ownership from ordinary owners to the trading class. The trinity of commodity production, wage labour and market system altogether had to evolve for capitalism to come into existence. Accordingly, various financial instruments took shape, the traditional ones became more formalized and many new ones were invented. The evolution of different forms of business, the 'company' form particularly, helped this process in a big way. Simultaneously, the financial anarchy put the systems in turmoil and hence regulatory bodies became a compulsion. These regulatory bodies assumed the twin role of regulation of financial markets, financial facilitation, as well as creating financial literacy among ordinary people to link their savings to the mainstream trade and commerce lines. The paper attempts to portray the evolution of modern financial system and find out how this evolution has been linked to the financial literacy of the common masses. Also the paper would throw lights on imminent market and systemic hazards caused by excess leliance on financialisation of economic system.
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