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Economics of Money and Banking
Course
en
English
65 h
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- Self-paced
- Free Access
- Fee-based Certificate
- 13 Sequences
- Introductive Level
Course details
Syllabus
- Week 1 - Introduction
The first two lectures paint a picture of the monetary system as the essential infrastructure of a decentralized market economy. The second lecture, "The Natural Hierarchy of Money", is a kind of high-level overview of the entire course, so don't expect to f... - Week 2 - Introduction, continued
The next two lectures are meant to introduce a key analytical tool, the balance sheet approach to monetary economics, that we will be using repeatedly throughout the course. As inspiration, first I provide a concrete example of how the approach works by "tran... - Week 3 - Banking as a Clearing System
In the next four lectures, we build intuition by viewing banking as a payments system, in which every participant faces a daily settlement constraint (a survival constraint). From this point of view, the wholesale money market plays a key role by allowing ban... - Week 4 - Banking as a Clearing System, continued
The next two lectures extend the payments system frame to non-banks by bringing in repo markets, and to the international monetary system by bringing in Eurodollar markets. Here, as in the previous two lectures, the emphasis is on settlement, and so implicit... - Week 5 - Banking as Market Making
"Market liquidity" is supplied by dealers who stand ready to absorb temporary imbalances in supply and demand by taking the imbalance onto their own balance sheets, for a price. From this point of view, banks can be considered a special kind of dealer, since ... - Week 6 - Banking as Market Making, continued
Here we adapt the Treynor model to banks, which we conceptualize as dealers in money, specifically term funding. Like Treynor's security dealers, banks supply market liquidity for a price. But sometimes, in a financial crisis, demand for market liquidity ove... - Week 7 - Midterm review and exam
The first twelve lectures have introduced all of the main concepts of the course. The midterm exam gives you a chance to test whether you have mastered these concepts before extending them into new areas in the second part of the course. But before you try t... - Week 8 - International Money and Banking
The next four lectures extend the "money view" perspective to the larger world of multiple national monies by thinking about the international monetary system as a payment system, and by thinking of banks as market makers in foreign exchange. The first lectur... - Week 9 - International Money and Banking, continued
The next two lectures use the Treynor model to understand how exchange rates are determined in dealer markets. In the second, we confront directly the puzzle we observed earlier in the course, namely why uncovered interest parity (UIP) fails to hold in real w... - Week 10 - Banking as Advance Clearing
The next four lectures extend the money view to the larger financial world of capital markets, where the price of risk is determined in dealer markets for swaps of various kinds. The first lecture is a kind of conceptual introduction, while the second transla... - Week 11 - Banking as Advance Clearing, continued
In the modern economy, the price of risk is determined in swap markets that distinguish specific forms of risk, most importantly interest rate swaps and credit default swaps. The Treynor model can be adapted to understand how the price of risk is formed in de... - Week 12 - Money in the Real World
In this final module, we bring the entire course together. These two lectures build on everything that came before, and show how all the pieces fit together into a unified whole. Specifically, the first lecture uses the conceptual apparatus of the money view... - Week 13 - Final Exam
The previous module operated in effect as a review of the entire course, so if you were able to make sense of those lectures, you are ready for the final. But maybe you first want to have a look back at the second lecture, "The Natural Hierarchy of Money", fo...
Prerequisite
None.
Instructors
Perry G Mehrling
Professor
Economics, Barnard College
Editor
Columbia University is a private university located in Morningside Heights, in the north-western part of the borough of Manhattan, in New York (United States). Its origins lie in King's College, founded in 1754 by King George II of Great Britain. It is one of the oldest institutions of higher learning in the United States and is part of the Ivy League group of eight of the country's oldest, most famous, most prestigious and most elitist universities.
Columbia is one of the most selective and prestigious universities in the world. The admission rate was 5.1% in 2019, comparable to Harvard and Stanford. Ranked first in the United States for research, it is sixth in the world (fourth in the United States) in the CUWR ranking of the world's top 1,000 universities and eighth in the Shanghai University Rankings.
Platform
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