Bài giảng Money and Banking - Lecture 01

Money and Banking Lecture 01 1-2 Text and Reference Material • The Primary textbook for the course will be • “Money, Banking and Financial Markets” by Stephan G. Cecchetti International Edition, McGraw Hill Publishers, ISBN 0-07-111565-X” 1-3 Text and Reference Material • Reference books will be • “The Economics of Money, Banking and Financial Markets”, by Fredrick S. Mishkin 7th Edition Addison Wesley Longman Publishers • “Principles of Money, Banking and Financial Markets” by Lawrence S. Ritter, Willaim L. Silber and Gregory F. Udell, Addison Wesley Longman Publishers 1-4 Course Contents • Money and the Financial System • Money and the Payments System • Financial Instruments, Financial Markets, and Financial Institutions • Interest rate, Financial instruments and financial markets • Future Value, Present Value and Interest Rates • Understanding Risk • Bonds, Pricing and Determination of Interest Rates • The Risk and Term Structure of Interest Rates • Stocks, Stock Markets and Market Efficiency 1-5 Course Contents • Financial Institutions • Economics of Financial Intermediation • Depositary Institutions: Banks and bank Management • Financial Industry Structure • Regulating the financial system • Central Banks, Monetary Policy and Financial stability • Structure of central banks • Balance sheet and Money Supply process • Monetary policy • Exchange rate policy 1-6 Course Contents • Modern Monetary Economics • Money growth and Money Demand • Aggregate demand • Business Cycle • Output and inflation in the short run • Money and Banking in Islam • Monetary and financial policy and structure for an Interest-free economy • Islamic Banking in the contemporary world 1-7 Five Parts of the Financial System 1. Money 2. Financial Instruments 3. Financial Markets 4. Financial Institutions 5. Central Banks 1-8 Five Parts of the Financial System 1. Money • To pay for purchases • To store wealth • Evolved from gold and silver coins to paper money to today’s electronic funds transfers • Traditional Paycheck system vs. ATM Withdrawals • Mailed transactions vs. E-banking 1-9 Five Parts of the Financial System 2. Financial Instruments • To transfer wealth from savers to borrowers • To transfer risk to those best equipped to bear it. • once investing was an activity reserved for the wealthy • Costly individual stock transactions through stockbrokers • Information collection was not so easy • Now, small investors have the opportunity to purchase shares in “mutual funds.” 1-10 Five Parts of the Financial System 3. Financial Markets • To buy and sell financial instruments quickly and cheaply • evolved from coffeehouses to trading places (Stock exchanges) to electronic networks. • Transactions are much more cheaper now • Markets offer a broader array of financial instruments than were available even 50 years ago 1-11 Five Parts of the Financial System 4. Financial Institutions. • Provide access to financial markets • Banks evolved from Vaults and developed into deposits- and loans-agency • Today’s banks are more like financial supermarkets offering a huge assortment of financial products and services for sale. • Access to financial markets • Insurance • Home- and car-loans • Consumer credit • Investment advice 1-12 Five Parts of the Financial System 5. Central Banks • Monitors financial Institutions • stabilizes the Economy • Initiated by Monarchs to finance the wars • The govt. treasuries have evolved into the modern central bank • control the availability of money and credit in such a way as to ensure 1. low inflation, 2. high growth, and 3. the stability of the financial system. • State Bank of Pakistan www.sbp.org.pk 1-13 Summary • Five Parts of the Financial System • Money • Financial Instruments • Financial Markets • Financial Institutions • Central Banks 1-14 Upcoming Topics • Five Core Principles of Money and Banking • Time has Value • Risk Requires Compensation • Information is the basis for decisions • Markets set prices and allocate resources • Stability improves welfare • Financial System Promotes Economic Efficiency • Facilitate Payments • Channel Funds From Savers to Borrowers • Enable Risk Sharing 1-15 Upcoming Topics • Money • Characteristics of Money • Liquidity • Payment system • Commodity vs. Fiat Money • Cheques • Other forms of payments • Future of Money • Measuring Money