The financial system performs a central economic and societal role by allocating capital to the productive sector and enabling individuals and firms to manage their financial resources. It does so by providing a wide range of financial products and services, including (i) credit products that finance the acquisition and production of goods and services; (ii) payment services allowing the circulation of funds across the economy; and (iii) investment products tailored to diverse risk profiles. As a result, the financial system is often regarded as the backbone of any economy and is therefore subject to extensive regulation and rigorous public oversight. Key policy objectives include preserving financial stability and soundness, protecting investors and consumers, and promoting competition and innovation. Several jurisdictions around the world have developed distinct regulatory mechanisms and toolkits to achieve these goals.
