Theoretıcal Foundatıons of the Bankıng System and Prıorıty Areas of Its Practıcal Actıvıtıes

This article comprehensively analyzes the theoretical foundations and practical aspects of the banking system, a vital component of the modern economic system. The banking system is characterized as a set of financial institutions and is considered the primary mechanism for regulating financial flows and ensuring the efficient allocation of capital in the national economy. The intermediary role of commercial banks is emphasized, as is their special importance in ensuring liquidity and financial stability in economic activity by attracting deposits and providing loans. The study examines the essence of the banking system within the framework of a systems approach and substantiates that it is a multi-level, open, dynamic, and self-developing system. These characteristics enhance the adaptability of the banking sector to economic and technological change. In particular, digital transformation, online banking, and the use of artificial intelligence are identified as key factors in improving banking efficiency. The article provides a comparative analysis of two main strategic models of commercial banks – foreign market and domestic market. While the first model is more focused on low-risk foreign assets, the second stimulates lending to the real sector and the development of the domestic economy. Both strategies yield different results depending on the banks' resource base and the economic environment. At the same time, the role of systemically important banks in ensuring economic stability, the associated risks, and the need for regulation are examined. As a result, the effective functioning of the banking system is directly linked to institutional stability, sound governance, risk management, and innovative approaches.