Introductory description

This module provides a rigorous discussion of the role of money, banks and other financial institutions in a modern economy.

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

• Money and payment systems

E.g. Money, its origins and the source of its value

• Financial systems

E.g. its functions in financing and risk-sharing

• Commercial banking

E.g. Financial Contagion across the Interbank network

• Bank fragility

E.g. Market friction (moral hazard and adverse selection) and the need for intermediaries Diamond Dybvig and banks role in liquidity provision)

• Prudential regulation

E.g. Lender of last resort (Bagehot’s principles) and rationales for deposit insurance

• The global financial crisis of 2008-2009

E.g. Stylised facts on financial crises and procyclicality of credit; refresher on 2008 crash

• FinTech and the payment system: cryptocurrencies, blockchain, and smart contracts
• CBDC (Central Bank Digital Currencies) and stablecoins: promises and risks
• Non-bank financial intermediaries and FinTech credits

Learning outcomes

By the end of the module, students should be able to:

• Demonstrate an in depth understanding of money, financial systems, and systemic risk in central banking
• Demonstrate an understanding of the functions of financial institutions, and their advantages as well as disadvantages as compared with financial markets
• Demonstrate an understanding of risk-taking incentives in the financial industry and how banking micro- and macro-prudential regulations help to maintain financial stability
• Evaluate detailed investigation and research into relevant central banking and financial regulation issues
• Demonstrate a critical awareness of research and advanced scholarship in the area of money, banks and financial innovation
• Reflect on and learn from some prior experience and thus be able to integrate new knowledge with past experience and apply it to a new situation
• Make sound judgements whilst understanding the limitations on judgements made in the absence of complete data

Indicative reading list

Reading lists can be found in Talis

Research element

Evaluate detailed investigation and research into relevant central banking and financial regulation issues

Subject specific skills

Utilise the economic and analytical tools from economics to understand the role of banks in the economy

Acquire and analyse data and information, and evaluate its relevance and validity to topics in banking.

Transferable skills

• Written communication
• Independent learning