Financial capital

Financial capital is like money but does not have all the functions of money.

For instance, a stock or bond is a store of value like money is, but, you cannot pay for groceries with it and get change in cash. You must trade the stock or bond for money, first, and then trade the money for your groceries. This is because the actual value of the stock or bond goes up and down compared to the groceries, faster than money's value does.

When it is not important whether money or a stock or bond or commodity contract is involved, the word "capital" can be used to mean any of them. However there are other styles of capital that sometimes can do the same thing. Social capital for instance means you can use favours to get certain kinds of help - but others, not part of the social network or within the social contract, would have to pay in cash.

Natural capital, land, is the most common collateral for loans of any kind of financial capital. This is so common it has its own name, which is mortgage. The debt is "secured" by the land and any house on that land. If the debt is not paid, the land and house are seized. Because they cannot move, people are willing to lend money "against the land". Land reform often happens because people who have land or live on land cannot get any financial capital to improve it or grow crops.

A political party usually takes a strong common attitude to how the financial capital markets should be used by the state. For instance, some say the state should not borrow or take on debt, because future people will have to pay it back.