Finance and the Financial System

We must become aware of the importance of the role played by the financial system since it decisively influences the pace and nature of economic activity. Its development, and the distribution of its results.

The financial system becomes a vital part of the economic system. All the agents that interact with it require this intermediation so that the economic resources flow from one to another, which moves the system’s gears.

Money was born as a tool that has contributed to simplifying the necessary transactions for the development of the economic activity. And the exchange of goods and services that people need to live, replacing barter or direct sale. Which -sometimes- made it difficult to agility in trade and compensation in the value assigned to each good or service.

The progressive and growing use of money as a means of exchange generated the need for systems to manage it. Not only for specifying it in its transportation or security in its custody. Among other reasons but for its disposal in the revitalization of the economy. Linking those who have it in excess with those who need it because they do not have enough. As we have referred to when we talk about the “power of money.

What Happens when Money doesn’t Serve its Purpose?

The original function of money may cease to be that of simplifying transactions in the economic system and contributing to the flow of economic activity and goes from being a means to attract an end in itself, for speculation. or to finance another type of activity that is harmful to people’s lives or where their rights are not respected.

For example: Within the framework of financial systems, an industry of “financial economy” has been develop that gives money a “life of its own. There is no longer only the real or productive economy, the one that generates work that dignifies people and produces goods and services to satisfy people’s needs.

Instead, economic activity has emerged that has money itself as its object of commerce and that seeks to generate wealth. Base on speculation and trading with money, through loans and other financial instruments, with the interest charges. Which on many occasions are excessive. This activity is base on a principle of injustice: a few gain at the expense of what others lose. On a global scale, this affects millions of people and sometimes entire countries. Generating a global system of injustice that leads to the impoverishment of these people and the null or limited development of nations.

Financial Investments that are Ethically Questionable

In recent years, some reports have been issue by economic research institutes and NGOs in which worrying data are disclosed regarding. The investments that various financial entities make in economic sectors whose activity is clearly questionable from the point of view. Ethical and in many cases, clearly clearly clearly clearly damage people’s rights.

From the point of view of Caritas, these investments are against our principles and values. But not only that, it is precise that the function of these financial entities is being distorted. Which should be to finance activities that promote the well-being and development of people.

Be Aware of the Destination of our Savings

We must state that not all banks carry out their activities in a way that is detrimental to the interests of individuals, companies, or organizations. Although part (or in some cases all) of its activity is not transparent. Or it is not known how it develops. We do not know to what extent it is contributing to boosting an economy that is at the service of people. Furthermore, we do not know what the ethical traceability of the money we entrust to you is like. In the hands of the person who ends up or finances what activity.

We were referring to the gigantic dimension of the financial system on a global scale. It translates into the existence of financial entities of enormous size. With complicated legal frameworks of related companies, with a presence in multiple countries. And whose activity is highly diversified in the management and marketing of numerous complex financial products and managed in a dissimilar and contradictory.

Probably a part of your business or money management is carrie out with criteria that benefit some economic activity consistent with the development of people.

But another part of this financial activity -in most cases much greater than the previous one- is destined to carry out a financial business. Directly related to speculation or the financing -either directly or indirectly- of harmful activities. Or harmful to people or the environment, or even that favor the development of illegal activities.

It is time to reflect and rethink how we are doing. Become truly aware of how these financial mechanisms occur and how it is that from here. The economic activity can “go wrong” and lead to the financing of an economy that is alien to our principles and values. Alien to solidarity.

Conclusion

We must become aware of the importance of the role played by the financial system since it decisively influences. The pace and nature of the economic activity, and its development. If you have any comments to contribute, we will be happy to hear them. Please share this article or tell us on social networks. We regularly update tips on our website work publishing. Please keep supporting us. Thank you.