Financial systems are structures that facilitate the exchange of funds between individuals, businesses, and governments. They include institutions like banks, stock markets, and insurance companies, which help manage money, provide loans, and offer investment opportunities. These systems play a crucial role in the economy by ensuring that resources are allocated efficiently. Additionally, financial systems encompass various instruments such as stocks, bonds, and currencies that enable people to invest and save. They also involve regulatory bodies, like the Federal Reserve or Securities and Exchange Commission, which oversee and maintain stability within the financial markets, protecting consumers and promoting economic growth.