Financial System

How money is exchanged between lenders, borrowers, investors, and the institutions that love them. This includes laws, regulations, and reporting requirements, but it also refers to how various institutions, providers, and clients all interact with each other. Financial systems can change over time; the way banks operated back in, say, early 1929 is a little different than how they operate today.

Well, that all sounds totally simple, right? And, maybe in some cases, it actually is. When we’re talking about the financial system in place at our favorite local bakery, Devilish Duke’s Dodgy Donut Holes, it’s probably fairly straightforward. Bills come in, payments go out. Employees work, employees get paid. Rent, taxes, insurance, supply costs, and equipment repairs are all handled according to Devilish Duke’s well-laid-out accounting processes and procedures. Everything is recorded and reported in accordance with the law. Bim bam boom, Devilish Duke’s Dodgy Donut Holes’ financial system is on fleek and helping the business stay solidly in the black.

Things can get a little more complicated when we start talking about bigger financial systems, like that of the U.S.. Here we have 200+ years of laws that have been enacted, edited, struck down, resuscitated, and generally morphed to apply to current circumstances. We’ve got states, counties, cities, and towns with their own financial systems to incorporate, not to mention millions of businesses and households with their own financial systems going on. We’ve got multinational lending brokers over here and local credit unions over there. And when we’re talking about the financial system of the U.S., we’re talking about how governmental entities regulate, track, and manage all of it.