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READING GUIDE
Learning Objectives
• Define ‘global imbalances’ and understand these imbalances have resulted in a flow of excess
savings out of Asia and the Middle East.
• Explain how banks can create money by lending out excess bank reserves.
• Understand why the Federal Reserve has expanded its balance sheet by buying financial assets from
US banks.
Topic Summary
The reading for this topic, Money, prices and the Reserve Bank (TB), covers most of what you need to know
about money and monetary policy, which we will talk about on multiple occasions throughout the course.
The readings Rebalancing growth in Asia and Sustaining a global recovery will give you a feel for some of the
major issues in the global economy today. We will discuss the issues covered in these two papers in more
detail later in the course.