The economy consists of the real sector, the financial sector, and the monetary sector. The real sector includes the production of goods and services as well as consumption and investment. Economic agents in the real sector are households and firms, as consumers and producers. Apart from being consumers, households are providers of factors of production, especially labour, which firms use in their production activity. Economic agents in the real sector transact goods and services in the goods market.
The financial sector is a sector that facilitates the need of households and firms for the financing needed to finance consumption, production, and investment. In the financial sector, various types of financing are available, which can be differentiated into debt financing and equity financing. The financing can be in the form of direct financing and financing provided by banks or other financial intermediaries. Here, the parties with excess money meet the parties needing money. Agents in the financial sector include banks and securities companies.
Meanwhile, the monetary sector is a sector that facilitates the availability of money in the economy. In addition to various types of money, such as currency and deposit money, in the monetary sector, there are also various types of instruments issued by the monetary system. The central bank is a monetary sector agent in charge of providing, distributing, and maintaining the value of money. The bank is also a monetary sector agent, as the party that converts currency into deposit money and provides liquidity to the economy through credit or financing.