1. What is the financial system?

Is a set of institutions, intermediaries, markets and financial instruments whose main objective is to channel savings from agents with financial surpluses to those with financial needs.

  1. What elements make up the financial system?

-Financial products (loans, shares)

-Financial markets (money markets, primary markets)

-Financial intermediaries (bankers, non-bankers)

  1. What is a financial product?

Financial instruments are contract that give rise to a financial asset in one company or entity and a financial liability or equity instrument in another.

  1. What are the main characteristics of a financial product? Describe them.

Profitability → the ability of a financial instruments to produce an income to is holder

Risk → this is the set of factors that may imply a different return than expected.

Liquidity → the ability to convert a financial product into cash at the lowest possible cost.

  1. When will a financial product be most profitable, taking into account risk and liquidity?

Will be more profitable the higher the risk assumed, but will have little liquidity. on the other hand, a financial product with a low return will have a lower risk and higher liquidity associated with it.

  1. What is a financial market?

Markets are the virtual physical meeting places between those who offer financial instruments and those who demand them. They determine the term of the exchange mainly the price through the interest rate, and the amount.

  1. Make a diagram of the classification of financial markets, indicating their main characteristics.

Financial markets.

  1. According to the maturity of the negotiated products

-Money markets → products with a maturity of less than one year are traded

-Capital markets → products with a maturity of more than one year are trated

  1. According to the moment of its life

-Primary markets → first time financial products issued are sold and bought

-Secondary markets → issued instruments are sold and purchased

  1. What is a financial intermediary and how are they classified?

They are who put people with financial needs in touch with those who have financial surpluses.

-Bankers → they issue financial products accepted as means of payment

-Non-bankers → they issue financial products that are not used as means of payment

  1. Name the main institutions of the European Union involved in banking and briefly describe them.

-Eurosystem → this is the monetary authority of the euro area.

-European system of central banks → ESCB is responsible for coordinating the monetary policy of all the central banks of the EU member state.

-European central bank → establishes rules to be complied with by the different national central banks in order to maintain price stability in the euro area.

  1. Name the main institutions related to the banking sector in spain and define them.

-Banco españa → it collaborates with the european institutions and carries out the functions of the eurosystem and the european central bank within its territorial scope.

-Fondo de garantía de depósitos (deposits guarantee fund) → this is a fund the guarantees up to 100000 euros deposited per customer in the event that a credit institution has solvency problems.

  1. What are the main functions of the Banco de España?

-Promotes the smooth functioning and stability of the financial system.

-It monitors the solvency and compliance with the specific regulations of credit institutions and financial markets.

-Prepares and publishes statistics related to its functions.

-It provides treasury and financial agent services for public debt

-Advises the government, carrying out studies and reports.

  1. Name the most important intermediaries supervised by the Banco de España and define them.

-The official credit institute (ICO) →  is a credit institution that also acts as a financial agency of the state.
-Financial Credit Institutions →  it is an entity specialize in granting loans, and can generally carry cut  wide range of financial asset transaction, but cannot take deposits from the public

  1. What is the CNMV and what is its fundamental objective?

The objective of the CNMV is to ensure the transparency of the spanish securities markets and the correct formation of prices, as well as the protection of investors.

  1. What is the DGDSFP? name five of his functions.

Is an administrative body under the Ministry of economy.

-Responding to queries on private insurance and reinsurance.

-Financial supervision and inspection of the operations and activity carried out by persons and entities.

-The control of compliance

-The supervision of the market conduct and practices of persons and entities

-Coordination of relations in the field of private insurances and reinsurances.