As already reflected above, the financial system fulfils the primary function of putting surplus spending economic units in contact with deficit spending economic units, but the financial system also fulfils another series of functions, such as:
- Support payment systems, channelling funds quickly, safely and efficiently.
- Analyse the viability and, where appropriate, provide financing for investment projects that could not otherwise be carried out.
- ,Serve as a vehicle for the instrumentation of the monetary policy applied by the monetary authority, which, through interest rates, conditions the evolution of savings, consumption and investment and, in this way, the course of economic activity and inflation.
To fulfil all its functions, a proper functioning of the payment system is essential, which is the set of:
- Instruments (cash, traditional negotiable instruments —bills, cheques, promissory notes, etc. —, credit card, bank transfer and direct debit);
- Processes (clearing and settlement); and
- Channels (bank office, ATM, point of sale terminal, mobile phone, Internet, etc.)
necessary to materialize the movement of money outflows and inflows derived from the transactions carried out by the economic agents, as well as for the fulfilment of the economic obligations derived from such transactions.
As previously indicated, the proper functioning of the payment system is essential, since the appearance of failures in it can translate into the unavailability of funds, in volume or term, preventing economic agents from meeting the commitments incurred in the ordinary course of business. The possible interruption of payment procedures and processes can lead to the spread of a situation of financial instability and, by extension, to a scenario of economic crisis.
