Financial System, Banking, and Regulatory Frameworks

Exam-Oriented Revision Sheet

1. 📌 Essentials

• The financial system comprises institutions, markets, products, infrastructure, regulators, and deposit insurers
• Money occurs through central banks and commercial banks via monetary policy and lending.
• Interest rate (cost of money) is influenced by policy rates, supply-demand, and market expectations.
• Payment systems include RTGS, SLIPS, SWIFT, and digital wallets, enabling efficient fund transfers.
• Banking products encompass deposits (savings, current, term, FCY), loans (personal, mortgage, leasing, business), and services.
• Regulatory acts like Banking Act No. 30/1988 govern banking operations, microfinance, leasing, and foreign exchange.
• Central banks use tools like policy rate, reserve requirements, and open market operations to implement monetary policy.
• Exchange rate regimes include fixed, managed floating, and flexible systems.
• Banks must maintain capital buffers per Basel standards; ICAAP assesses risk and stress testing.
• Financial stability is maintained through macroprudential policies, supervision, and crisis resolution.
• Digital banking trends include mobile, internet, wallets, with cybersecurity as a key concern.
• Financial literacy and inclusion are vital for sustainable development and SDGs.
• Global institutions like IMF, World Bank, and rating agencies support stability and growth.
• Common pitfalls…