The banking system is the aggregate of all banks in the national economy. Currently, in countries where there is a developed market economy, this system has 2 levels - the Central Bank and commercial banks. The Central Bank can be represented as a combination of other banking institutions that perform the functions of the Central Bank itself. The Central Bank performs all monetary functions - it exercises a monopoly of national banknotes, deals with loans and has other important functions. Commercial banks concentrate mainly credit resources and carry out banking operations, as well as financial services for legal entities and individuals. Commercial banks can be divided into state, cooperative and joint-stock forms of ownership.
In general, the banking system is a combination of existing banks, credit institutions, and economic organizations performing banking operations. In addition to these organizations, the banking system also has specialized organizations that do not carry out any banking operations, but support the activities of banks. For example, it can be cash settlement centers, dealerships, audit firms, companies that work on securities, as well as organizations that work on bank ratings and provide banks with special information and equipment. All this is the banking system.
Banks and all credit organizations constantly interact with the following customers:
- with subjects of the economy;
- together;
- with the Central Bank;
- with other authorities.
The first such concept as the banking system arose for the first time in well-developed economic countries - Switzerland, Great Britain, Germany, Japan, the USA and others. For example, the Swiss banking system is one of the most powerful and advanced systems in the world.
As part of the banking system is part of the country's large economic system. This can be interpreted as the fact that this system is closely related to the consumption, production and circulation of various intangible and material goods. The success of a country's economic development largely depends on how the bank and the banking system function.
Banks that operate in the country may have a different system - two-tier or single-tier. The two-level system speaks for itself - the first level is the Central Bank, and the second - credit institutions or commercial banks. Most of this kind is found in the world. A single-level system is rare, but everything becomes real when the country does not have a Central Bank, or when it has, but only one such Central Bank operates in this country.
In the modern rhythm of life and a market economy, the banking system has quite a few functions. Changes that occur in this system, whether they are positive or negative, affect, as a rule, the entire economy of the country. For the organization of the banking system to work correctly, it is necessary to strictly comply with all requirements and develop all banking areas. And the normal functioning of the country's economy depends on this.
A good credit policy requires stability in the banking system. And the channel through which all monetary operations go is the banking sector, and the entire banking system is directed at it.
In conclusion, we can say that the banking system is a holistic entity that ensures a stable situation in the country. The banking system is part of a society that operates within the framework of laws and is subject to legal norms.