International Money and Banking

This module focuses on central banks, monetary policy and the role of the banking system in the economy. It is
organised in five sections.
1. Banks, Financial Intermediation and Central Banks

How banks operate, why they are important, what central
banks are, how they create money, the relationship between money and inflation and how central banks control
short-term interest rates.

2. Financial Crises and Banking Regulation

How banking crises come about, policies to prevent and deal with
crises.

3. How Central Banks Affect the Economy

The term structure of interest rates, default risk and collateral,
asset prices, effects of real interest rates on consumption and investment, liquidity traps.

4. The Limits to Monetary Policy and Central Bank Strategy

Inflation and the Phillips curve, central bank
institutions, goals and strategies, rules for setting interest rates.

5. Exchange Rate Regimes and the Euro

The trade-off between control of interest rates and exchange rates, optimal currency areas, the future of the
euro.