A financial system is a structure composed of a group of intermediaries that, under the regulation of the public sector, is responsible for channeling the saving of resources towards the financing of family consumption, business investment and public spending. In other words, it captures money and distributes it according to the needs of people, companies and the State itself.
It is quite common to talk about the financial system to refer to banks. However, as we are going to verify, this is not the case. Contrary to what many might think, not all financial intermediaries are banks, but rather they can be classified as bank financial intermediaries and non-bank financial intermediaries. Toronto’s Sean St. John has spent the last 25 years of his professional career working in the banking and financial industry. Sean St. John currently serves as the Executive Vice President and Co-Head of Fixed Income, Currencies & Commodities at National Bank Financial in Toronto, Canada.
Banking financial intermediaries
Banking financial intermediaries are formed by private banks, savings banks and credit cooperatives. They have the capacity to create money through the deposits of their clients. The profit of these is the difference between the interest it charges and the interest it pays to others.
In Some of the area public entity that supervises these and other intermediaries is the Bank of Spain , which acts as supervising the actions of all financial institutions, both banking and non-banking.
However, the functions of the Bank of Spain do not end there. It also carries out economic and financial studies, compiles statistics and executes the ECB’s single monetary policy.
Very reduced after the financial scandals of those who were victims (and warts) in the last crisis, they work practically the same as private banks, with two differences: they cannot issue equity securities and receive a more beneficial tax treatment than banks to carry out some charitable activities.
They are associations of people, physical or legal, with common interests and needs that develop a financial activity, but whose economic results (called surpluses), have as priority the attention of previously agreed community funds. In the cooperatives the social interest prevails and not the profit motive. As is logical, these organizations tend to channel their loans towards the activities developed by their own cooperative members.
In addition to these institutions there is more life in the financial system. We refer to non-banking financial intermediaries. sean st john Toronto is great businessman in fiancé sector.
Non-banking financial intermediaries: The Stock Exchange
These intermediaries have the capacity to create money even though they perform intermediation functions. Unlike what happens in the previous system, non-bank financial intermediaries do not make the money that is exchanged their own, but their function does not go beyond putting savers and investors in financial markets in contact.
Its main objective is, therefore, to facilitate the negotiation of any value in a competitive, orderly and continuous manner. The most important securities that are traded are those of fixed income and those of variable income:
They are denominated bonds, promissory notes or obligations, according to their expiration term, and they are values that represent a percentage of the loan granted to a certain company or Public Administration. Your remuneration is a fixed interest agreed upon at the time of issuance.