... along the circuit, the financialsystem governs the supply and demand of funds and, at the end of the process, it determines the condition for the closure of the circuit. As discussed, the conditions ... andrecent evidenceCTF clarifies the role of the financial system in the functioning of a monetary marketeconomy of production. At the start of the circuit process, the financial system supports ... institutions on the basis of the implicit guarantee of (perceived) unlimited solvency of the public sector. Also, the largeshare of public spending on aggregate output stabilizes the flow of funds...