This paper discusses the financial market and the financial system. The division of the financial markets on the spontaneous and organized market, then the primary and The secondary market and the money market and capital market. Each of these markets has its own peculiarities, laws and regulations governing. There are many functions of the financial markets such as the function of connecting, allocative function, development, economy, etc. function. Also, the paper also discusses the financial intermediation and within that states who are all considered financial intermediaries. These are deposit institutions (commercial banks, savings banks, etc.), Contractual savings institutions, investment intermediaries and others. Particular emphasis is placed on the role and operations of banks and the state criteria of division of banking operations. Shows the situation of the banking system in the European Union and the Republic of Croatia.