Financial systems Essay Example | Topics and Well Written Essays - 2000 words

Financial systems - Essay Example tion is, i.e., the greater the efficiency with which it can mobilise the resources in the economy and create value, the stronger will be the fundamentals of the concerned nation. The financial institutions together form the financial market of a nation. These institutions contained within the financial web or community could be categorised into a number of groups depending on the type of activities with which they are involved. These different groups, namely, the agents, brokers and financial intermediaries are linked up with one another closely through contractual agreements or legal orders. While agents and brokers operate to bring the institutions and investors closer to each other, the intermediaries are the ones who channelise the flow of funds between any two agents. However, the classification above had been rather a broad one and the significant financial institutions are actually represented by special terms as follows – The banking sector – This sector comprises of financial intermediaries involved in channelising the flow of resources. To be precise, the banking sector indulges in accepting surplus deposits and lending them to deficit accounts. Foreign exchange market – Foreign exchange market also comprises of agents and brokers with the only difference with the former being that the role is being played by the commercial banks of the concerned nation (Das, 2005). Government debt market – The government debt market comprises of intermediaries in the form of the central bank of a given nation. It indulges in accumulating debt for the government from internal as well as external sources. The UK financial system is often claimed as one of the most robust and sound system among its counterparts in various developed nations, by the economists and political leaders of the nation. In fact, such claims could be debated by various facts and figures post the global financial meltdown. The bank had kept its prime lending rate rather low at 5.52%