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Course outline
Course outline
Overview of the monetary and financial system
The roles of money
The risk and term structure of interest rates
Fundamental pricing of assets
Financial frictions
Credit, financial intermediation, and money
Modern monetary economics and policy
Liquidity, leverage, and the financial cycle
Financial crises, systemic risk, and macro-prudential policies
Exchange rates and interest rates
Digitalization, tokenisation, and the roles of money
Readings
Readings
There is no textbook for this course. The study material for each topic is given by the articles, data, videos and slides, as detailed below. For introductory or background reading you might pick one of the following optional textbooks:
Frederic S. Mishkin (2018). The Economics of Money, Banking, and Financial Markets. 12th edition, Pearson.
Stephen G. Cecchetti and Kermit L. Schoenholtz (2021). Money, Banking and Financial Markets. 6th edition, McGraw Hill.
Exam
Exam
THE WRITTEN EXAM WILL CONSIST OF 4 OPEN-ENDED QUESTIONS TO BE ANSWERED IN A 2 HOUR-SESSION.
Detailed contents and study resources
Detailed contents and study resources
Slides can be downloaded until 31 January 2026; afterwards, students can obtain them by writing to the teacher
1. Overview of the monetary and financial system
2. The roles of money
Data: https://www.ecb.europa.eu/stats/ecb_statistics/escb/html/index.en.html
Data: https://www.ecb.europa.eu/stats/ecb_statistics/key_euro_area_indicators/html/index.en.html
3. The risk and term structure of interest rates
Data: https://www.ecb.europa.eu/stats/financial_markets_and_interest_rates/html/index.en.html
Data: https://www.newyorkfed.org/research/capital_markets/ycfaq.html#/overview
P. Veronesi (2016). Handbook of Fixed Income Securities (Chapter 1). Wiley Handbooks.
Kim, D and A Orphanides (2007). The bond market term premium: what is it, and how can we measure it? BIS Quarterly Review, June, pp 27-40.
4. Fundamental pricing of assets
F. F. Schwartzman (2014). How Can Consumption-Based Asset-Pricing Models Explain Low Interest Rates? Federal Reserve Bank of Richmond Economic Quarterly, 100, 3, 209-240.
5. Financial frictions
Hall, R. E. (2010). “Why Does the Economy Fall to Pieces after a Financial Crisis?” Journal of Economic Perspectives, 24 (4): 3–20.
6. Credit, financial intermediation, and money
Data: https://www.ecb.europa.eu/mopo/implement/app/html/index.en.html
Video: https://youtu.be/_I5-hQRDnus
M. McLeay, A. Radia and R. Thomas (2014). Money creation in the modern economy. Bank of England Quarterly Bulletin 2014 Q1.
7. Modern monetary economics and policy
R. Lagos (2006). Inside and outside money. Federal Reserve Bank of Minneapolis, Research Department Staff Report 374.
N. Kiyotaki and J. Moore (2019). Liquidity, Business Cycles, and Monetary Policy. Journal of Political Economy, vol. 127(6), pages 2926-2966.
P. Tucker, S. Cecchetti (2021). Understanding how central banks use their balance sheets: A critical categorisation. VoxEu column.
8. Liquidity, leverage, and the financial cycle
S. Boocker, D. Wessel (2023). What is the neutral rate of interest? The Hutchins Center Explains, Brookings, 18 September 2023.
C. Borio, M. Drehmann and D. Xia (2019). Predicting recessions: financial cycle versus term spread. BIS Working Papers #818.
9. Financial crises, systemic risk, and macro-financial policies
10. Exchange rates and interest rates
Video: https://www.bis.org/events/financial_system_exchange_rates.htm
C. Engel and F. Zhu (2018). Revisiting exchange rate puzzles. BIS Papers #96.
11. Digitalization, tokenisation, and the roles of money
R. Auer, J. Frost, L. Gambacorta, C. Monnet, T. Rice and Hyun Song Shin (2021). Central bank digital currencies: motives, economic implications and the research frontier. BIS Working Papers No 976, 04 November 2021.
Links
Links
Bank for International Settlements
Google Sites
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