Banking Law

We explain what banking law is, what operations it regulates and what its rules are. In addition, we tell you why it is important.

Money transfer companies are also governed by banking law.
Banking law regulates the practice of banking, contracts and financial operations.

What is banking law?

banking law It is a branch of law that deals with studying and legislating matters related to good banking practice., that is, formal money lending and the sale of insurance and financial instruments. These issues are usually classified into three types:

  • Passive or deposit-taking operationsin which a banking organization receives and guards the money of individuals in checking, savings, investment accounts, etc., and gives them in exchange a percentage of the interest accrued with the loan of their money.
  • Active operations or bank loans and creditsin which a banking organization delivers a requested amount of money to an individual as a loan, in exchange for charging a certain interest rate.
  • Neutral operations or banking servicesin which a banking organization allows its clients to carry out collections, transfers, deposits, investments and other types of services from which the bank does not necessarily obtain a dividend.

Banking law has its antecedents in the legislation of Ancient Rome (Roman law), since certain rules were already imposed on the loan of money at that time. However, given the importance of banking in the contemporary capitalist world, banking law has grown in importance and today deals not only with regulating the professional practice of banking, but also with contracts and banking and financial operations.

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For the same reason, in the study of law there is a wide debate as to whether banking law belongs to public law or private law. Although banking operations began in the Renaissance as a form of private business initiative, in today’s world they form a central part of the economy of nations and are under strong observation by States. This is why the public sector often has to intervene in banking crises, to save savers’ money and prevent a social catastrophe.

These and other particularities make banking law one of the most technical branches of current law, especially complex for those who are unaware of the concepts and basic legal terminology. In fact, banking law normally has specific regulations for each type of banking institution that exists.

Importance of banking law

Bank customers carry out operations within the framework of banking law.
Banking law protects the money that citizens deposit in banks.

banking law it is of crucial importance in the functioning of modern capitalist economies, in which the flow of money is continuous and constant and generates new dividends from borrowing and speculation. The banking and financial sectors are some of the largest economic players in a nation, and are closely linked to the dynamics of consumption, in an increasingly technological and computerized world.

Thus, for example, debit and credit cards, electronic transfers and other payment instruments depend directly on the services provided by banks, without which people would depend exclusively on the accumulation of cash.

Banks provide a margin of safety to commercial and financial operations and make it possible to accumulate on safer terms, but Precisely for this reason, they require proper supervision and clear and formal laws.because the money that appears in the banks is, precisely, the money of the citizens to whom the law must protect.

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Banking Law Rules

Not being one of the classic branches of law, banking law It is not regulated by a specific regulatory body, but is considered as part of commercial lawalthough many of their interactions with the State are regulated by administrative law.

Given this complex nature, banking law is part of a set of rules specific to different legal orientations, such as:

  • constitutional norms, collected in the fundamental document of the legal order of a country (the National Constitution or Magna Carta). They usually define the powers of the State in matters of foreign exchange, credit management, banking and insurance.
  • commercial standardstypical of commercial law and the commercial code, regulate the business exercise and therefore affect banks, since most of them are private for-profit entities.
  • Administrative rulesdetermine the financial obligations of these entities, in order to guarantee certain minimum margins of transparency and control of the State.
  • tax rulesincluded in tax codes and controlled by tax institutions, ensure that banks comply with their obligations to the State.
  • penal normscontemplated in the criminal code, impose sanctions on organizations and individuals linked to banking that fail to comply with the basic rules of good professional and commercial practice, and healthy coexistence.
  • labor standardsdetermine the duties and rights of workers and employees of credit and financial institutions.

Continue with: Financial Law


  • “Banking Law” in Legal Encyclopedia.
  • “Banking Law” in the Expansió Economic Dictionary.
  • “Banking Law – Part 1” (video) at the Instituto Tecnológico de Monterrey (Mexico).
  • “Banking law: general considerations” by José Luis García-Pita y Lastres in the Repository of the University of La Coruña (Spain).
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