electiveHQ

This module focuses on the role of the banking system in the economy and the roles played by central banks in the banking system and in implementing monetary policy. The module also examines the interaction between monetary policy and exchange rate regimes and takes a close look at European Monetary Union. The module will have three parts. 1. Central Banks and the Banking System How banks operate and why they are important; what central banks are and how they create money; the Federal Reserve and the ECB; how banking crises come about; policies to prevent and deal with crises; current issues in banking regulation and crisis prevention. 2. Monetary Policy The relationship between money and inflation; how central banks control short-term interest rates; the term structure of interest rates; default risk and collateral; quantitative easing; the Phillips curve; central bank institutions; rules for setting interest rates. 3. Exchange Rate Regimes and the Euro The trade-off between control of interest rates and exchange rates, optimal currency areas, European monetary union.