The capital market is part of a system comprising, besides itself, the money and currency markets. Its function is to provide space for transactions in debt and equity instruments which are not concluded directly through the stock exchange or banks. In a more restricted sense of the word, the role of the capital market is to finance medium and long-term investments. In practice, this involves issuing various financial instruments.

The most important role of the capital market consists in capital allocation, both in terms of time and space. This is followed by three other functions, namely the informative, transformational and pricing function.

In the course of history, financial systems evolved gradually in two different directions: either towards the Anglo-Saxon market-based model with its overwhelming role of capital (dominated by investment in pension, mutual and insurance funds) or the continental bank-oriented model. The Polish financial system could not be classified as either - it combines features of both the models.

Assuming that in order to meet the standards of a modern capital market, a system has to be characterised by the following five features: fairness, transparency, liquidity, efficiency and innovation, we find that the Polish market can boast only two of them: it is fair and transparent. The task of building up the remaining ones is not going to be easy. This achieved, however, Poland will become one of the developed capital markets where participants are able to effectively implement the strategies they have drafted for their capital.