Professor Richard Werner gave an interview recently where he very concisely describes how our financial and banking system currently works, and more importantly, why it doesn't work well and is unstable.
Of particular interest is his comments on bank lending for speculation and how this leads to bubbles and crashes in markets. How preventing bank lending to speculators, including investment banks, eliminates these boom bust cycles.
In the US we had a law that implemented this principle called Glass-Steagall. This Depression era law was part of the New Deal separated commercial banking from investment banking and other FIRE industry sectors so that bank lending was not available to these other sectors.
The professor points out the bank lending creates money. If that money is created against existing assets such as securities and fine artworks then the only result is to increase the amount of money in the economy without creating any new value. This only leads to increased prices as more dollars chase the some goods. The reverse is also true. As lending is withdrawn the money supply falls and asset prices follow suit. The boom and the bust.