The UK Financial System
The financial system is central to the functioning of the economy and modern life.
The system handles millions of regular transactions - spending in the shops, paying bills, wages and savings - every day. Financial institutions, such as banks, manage vast sums of money on behalf of individuals and businesses. Financial markets facilitate trade across the world on a minute-by-minute basis - everything from company shares and commodities like oil, to complex financial instruments and, of course, money itself. And large IT systems facilitate payments between financial institutions, companies and individuals.
One of the main purposes of the financial system is to bring together savers and investors, and so put money to work. One person's savings are the finance for another person's investment - for example, household savings are invested by pension funds in shares issued by companies to expand their business.
For the financial system to function properly, people need to have confidence that it is safe and stable. The Bank of England's aim is to contribute to maintaining financial stability in the UK as an essential ingredient for a healthy and successful economy.
