The financial system consists of:
i. Financial intermediaries, which indirectly bring together those seeking earnings on their funds and those seeking credit, although borrowers can also obtain funds directly from financial markets by issuing securities. They include credit institutions, insurance corporations, occupational pension funds, investment services firms, collective investment schemes etc.
ii. Financial markets, which channel excess funds from lenders to borrowers. They include money and capital markets.
iii. Financial market infrastructures, which permit the transfer of payments as well as the trading, clearing and settlement of securities. They include payment, clearing and settlement systems.
A stable financial system is a key ingredient for a healthy and successful economy. People need to have confidence that the system is safe and stable and functions properly to provide critical services to the wider economy. It is important that problems in particular areas do not lead to disruption across the financial system.