Understanding Financial Intermediaries and Banking Systems
The Central Bank and Private Banking
The Fed (Central Bank): It is an atypical case of an intermediary that does not usually work with individuals or companies. The Central Bank grants financing to the rest of the world, the public sector, and other financial intermediaries.
Private Banking: Banks, as stated, retain part of their funds in cash and allocate the rest to financing the private sector—that is, individuals and enterprises—through credits, loans, and purchases of bonds and equities, as well as the public sector.
Savings Banks and Credit Cooperatives
Savings Banks: In particular, these tend to equate with commercial banks. In any case, savings banks are specialized in raising funds from small savers' deposits through savings instruments such as savings books.
Credit Cooperatives: These are usually created by cooperatives. They present their collections to the public sector, financial intermediaries, cooperatives, and the public in general. For the rest, their operations are very similar to those of banks and savings banks.
Non-Bank Financial Intermediaries
Official Credit Banks
Official Credit Banks: These act as intermediary simulators, completing the channel for private financing, generally for the medium to long term, in sectors identified as priorities from the perspective of the government's economic policy. Resources are obtained through budgetary allocations or by issuing corporate securities.
Insurance and Pension Funds
Insurance Companies and Pension or Mutual Funds: Their mission is to complement or supplement the social security pension paid after retirement. Associates are charged periodic contributions during their working lives.
Investment and Mutual Funds
Investment Companies and Mutual Funds: They capture their resources by issuing shares. These resources are invested in equities and fixed income, thereby facilitating the access of small savers to the stock market.
Specialized Financial Institutions
Mortgage Societies: These companies extend credit and derive their resources through deposits or by issuing bonds secured by their mortgage loan portfolio or a specific appropriation.
Leasing Institutions: This type of financing is dedicated to providing customers with equipment or property in-kind in exchange for installments.
Factoring Institutions: These advance funds to their customers in exchange for the sale of their commercial debt, for which collection is managed and guaranteed.
Money Markets and Guarantee Societies
Money Market Brokerages: These are specialized in the management of highly liquid assets, such as Treasury Bills and certificates of deposit with the Central Bank.
Mutual Guarantee Societies: These promote access to financing for their partners by securing the repayment of the credits they obtain.