Global financial system and its structure
The global financial system it is a complex network that connects markets, institutions and countries, facilitating the circulation of capital worldwide.
This network ensures monetary stability, promotes economic development and sustains international trade through an organized and regulated structure.
Its structure is made up of banks, stock exchanges and international organizations that regulate and supervise financial relations between nations.
Main components of the financial system
The financial system mainly includes the banks, stock exchanges and international organizations that coordinate global financial supervision.
Banks act as intermediaries between savers and productive sectors, offering loans, managing deposits and facilitating payments.
Stock exchanges allow the trading of stocks and bonds, giving access to capital to companies and governments around the world.
International organizations, such as the IMF and the World Bank, regulate the system and guarantee financial cooperation between countries.
Objectives of the global financial system
The global financial system seeks to promote macroeconomic stability and facilitate the efficient flow of resources between different economies.
Its main objective is to foster sustainable economic development and support growth through global capital mobilization.
In addition, it works to minimize financial risks, ensure monetary stability and adapt to technological and geopolitical changes.
Functions and roles of banks
Banks are fundamental pillars of the financial system due to their ability to mediate resources and manage key operations for the economy.
They act by connecting those who have financial surpluses with those who need financing, facilitating the circulation of capital.
In addition, they fulfill essential functions that guarantee the stability and efficiency of the global financial system.
Financial intermediation and credits
Financial intermediation is the process by which banks channel individuals' savings into productive investments with credit.
Banks assess risks and grant loans that finance everything from small businesses to large business and state projects.
This role allows maximizing the efficient use of financial resources available in the economy, promoting development.
Functions of central banks
Central banks control monetary policy to maintain price stability and avoid financial crises.
They also oversee the banking system, regulate the money supply, and act as lenders of last resort in emergency situations.
Their work contributes to confidence in the currency and the financial system, a crucial element for the global economy.
Deposit and payment management
Banks manage customer deposits, ensuring the security of their funds and facilitating quick access to them.
Likewise, they manage payment systems, allowing efficient and secure transactions, both national and international.
This function is vital for the proper functioning of commerce, investment and the daily lives of people and companies.
Stock exchanges and financial markets
Stock exchanges are platforms where financial instruments are traded that allow investment and financing at a global level.
These markets facilitate the efficient allocation of capital, connecting investors with companies and governments seeking financing.
Its operation is key to liquidity and transparency in international financial transactions.
Negotiated financial instruments
Stocks are mainly traded on the stock exchanges, which represent partial ownership in companies and bonds, which are debt issued by public or private entities.
In addition, there are other instruments such as derivatives and exchange-traded funds that allow you to diversify and manage financial risks.
These instruments offer different levels of risk and return, adapting to the needs of varied investors.
Global access to capital for companies and governments
Financial markets provide an important avenue for companies and governments to raise resources on a large scale through the issuance of securities.
This global access allows financing infrastructure projects, business growth and public policies with investors from around the world.
The internationalization of capital improves the diversification of sources and contributes to sustainable economic development.
International organizations and regulation
The international organizations they play a crucial role in monitoring and regulating the global financial system to ensure stability and cooperation.
These institutions work to coordinate economic policies, offer financial assistance and facilitate cooperation between countries in a globalized environment.
Its function is fundamental to face challenges such as financial crises, economic inequalities and technological evolution.
Functions of the IMF, World Bank and BIS
The International Monetary Fund (IMF) monitors macroeconomic stability and provides financial assistance to countries in economic difficulties.
The World Bank finances development projects in emerging economies, promoting sustainable growth and poverty reduction.
The Bank for International Settlements (BPI) facilitates cooperation between central banks and regulates international liquidity to maintain financial stability.
International agreements and multilateral organizations
The international agreements and multilateral organizations such as the World Trade Organization (WTO) promote the liberalization and stability of global trade.
These agreements establish standards and coordinate policies to ensure a balanced financial market and reduce systemic risks globally.
Multilateral cooperation strengthens trust between nations, promoting an environment conducive to global economic and financial development.
