Structure of the Spanish Financial System
Spanish Financial System
This constitutes the set of institutions mediating between the plaintiffs and the suppliers of financial resources. The fundamental distinction between different financial intermediaries is that they are divided into bank and non-bank. Bank workers are those whose financial assets are generally accepted as an indirect means of payment, that is, money. Non-bank financial intermediaries are characterized by issuing financial assets that are not money in the strict sense and are liabilities for them.
Bank Financial Intermediaries
Bank financial intermediaries create money by granting loans for an amount greater than total reserves. They form, by amending the banking system, the money supply, that is, the quantity of existing purchasing power to buy goods and services, and this increases aggregate demand.
The Bank of Spain
The Bank of Spain does not usually work with individuals or companies; it provides funding to the rest of the world (public sector and other financial intermediaries). When it buys foreign currency, it funds the sector; these are foreign currency deposits in banks issued by other countries. The public sector extends credit to finance the Treasury and Public Debt, which it acquires, sells, or buys. It also gives credit to other financial intermediaries through special bank credit. The financial liabilities issued are coins and banknotes, which are legal tender.
Private Banking
Banks keep part of their funds in cash and allocate the grant to financing the private and public sectors. Financing the public sector is done by both compulsory purchase of government bonds and voluntary debt in the short or long term. They receive funding through public deposits and the issuance of equity and fixed income.
Savings Banks
Savings banks tend to be equated to banks; they are specialized in raising funds from small savers through savings deposits through the use of notebooks. The stability of their liabilities allows them to grant long-term loans in a greater proportion than banking.
Credit Cooperatives and Rural Banks
They lend their funds to the public sector, other financial intermediaries to cooperators, and the general public. Their operation is very similar to that of banks and savings banks.
Non-Bank Financial Intermediaries
The Official Credit Institute
The Official Credit Institute is a public agency that complements private financial intermediaries and channels its funding for the medium and long term and the sectors the government considers priorities. It obtains resources through budget allocations or income from issuing fixed-income securities.
Insurance Companies
Insurance companies (companies or mutuals) issue, as a specific financial asset, insurance policies that provide compensation if the insured event occurs. In anticipation of an incident occurring, they have to build large reserves invested in other financial intermediaries and corporate or public securities.
Pension Funds or Mutual Funds
Pension funds or mutual funds, both public and private, supplement or supplant the work of Social Security, paying pensions after retirement. Associates make periodic contributions during their active working life.
Investment Companies and Funds
Investment companies and funds capture their resources through the issuance of shares. The sum obtained is invested in equities and fixed income, facilitating access for small savers to the securities market. Investment funds are similar, but differ in that these usually take the form of assets without legal personality, attracting resources to issue participation certificates representing a portion of the assets.
Mortgage Companies
Mortgage companies grant mortgages for which they obtain their resources through deposits or issuing bonds guaranteed by a specific mortgage loan portfolio.
Credit or Leasing Institutions
Credit or leasing institutions engage in financial leasing, financing in kind, giving customers equipment or property in exchange for a periodic fee. When the contract is fully amortized, and if the customer wishes, they can buy the good for a small residual amount.