CENTRAL BANK

and MONETARY POLICIES

International School
 Introduce

+84365388130 13 months
nguyenminhanh Nguyen Thi Minh Anh (pls text again)
@tnu.edu.vn
FB: Minh Anh
CENTRAL BANK
and MONETARY POLICIES

3 credits = 45 hours
8 chapters
Objects

Understand the role and Understand the Apply the knowledge

function of money in the economic issues behind learned in practice to
economy, especially in the conduct of well perform the work
the determination of monetary policy and social
inflation and output responsibility of
businesses and
Understand the different Understand the formulation individuals .
views and schools of of expectations and the
thought in monetary important role of
economies expectation in economic
decisions and policies
Contents
• Chapter 1: An Introduction to Money and the
Financial System
• Chapter 2: Money and the Payments System
• Chapter 3: Financial Instruments, Financial Markets,
and Financial Institutions
• Chapter 4: Central Banks in the World Today
• Chapter 5: The Structure of Central Banks: The
Federal Reserve and the
• European Central Bank
• Chapter 6: The Central Bank Balance Sheet and the
Money Supply Process
• Chapter 7: Monetary Policy: Stabilizing the Domestic
Economy
• Chapter 8: Exchange-Rate Policy and the Central
Bank
Requirement
• Joint class every hour • Do homeworks
• Take notes • Read before class

Assessment method

Criteria Note
- Full attendance, contribution during class
Attendance
- Quizzes / Assignments
Mid-term Test Test
Final Test Multiple choices, Essay
 Chapter 1

An Introduction to Money
and the Financial System
 Contents
Six parts of the financial system.

Five core principles of money and banking

Getting started

This morning, a typical American college student bought

coffee at the local café, paying for it with an ATM card. Then
she jumped into her insured car and drove to the university,
which she attends thanks to her student loan. She may have
left her parents’ home, which is mortgaged, a few minutes
early to avoid construction work on a new dormitory, financed
by bonds issued by the university. Or perhaps she needed to
purchase this book online, using her credit card, before her
first money and banking class began.
Crisis 2008-2009
The Six Parts of the Financial System
Money Financial markets Government
• Payment • Buy and sell regulatory
financial agencies
• Store of wealth
instruments • responsible for
safe and reliable
Financial Financial Central banks
instruments institutens • Monitor and
• Stocks, bonds • Banks stabilize the
• Mortgages • Securities firms economy
• Insurance policies • Insurance
companies
 The Six Parts of the Financial System

MONEY

• gold and silver coins (commodity money)

• paper currency (fiat money)
• electronic transfers
• means of payment: currency  withdraw from ATM  bank’s
website/smartphone
 The Six Parts of the Financial System

FINANCIAL INSTRUMENTS

• Securities: stocks and bonds small

number
• Collecting the information
necessary to evaluate time
a potential consuming
Costly
Investment Mutual
was a daunting task funds
 The Six Parts of the Financial System

FINANCIAL MARKETS

• stocks and bonds are sold

• reduced the cost of processing financial transactions
• individuals exchange  specifically trading places  handled by
electronic networks
• offer a much broader array of financial instruments than before
 The Six Parts of the Financial System

FINANCIAL INSTITUTENS

• Bank = vaults where people could store their valuables

• Accept deposits and make loans
• FINANCIAL SUPERMARKET: financial markets, insurance policies,
mortgages, consumer credit, and even investment advice
 The Six Parts of the Financial System

GOVERNMENT REGULATORY AGENCIES

• wide-ranging financial regulation: rules for the operation and

supervision
• the evolution of financial instruments, institutions, and markets
has led to many changes in the ways that regulatory agencies work
 The Six Parts of the Financial System

CENTRAL BANKS

large private
banks government modern central
(to finance treasuries banks
wars)

• control the availability of money and credit  stability

The Five Core Principles of Money and Banking

Stability

Time Markets

Informa-
tion

Risk
The Five Core Principles of Money and Banking

Core Principle 1: Time Has Value

The Five Core Principles of Money and Banking

Core Principle 2: Risk Requires Compensation

The Five Core Principles of Money and Banking

Core Principle 3: Information Is the Basis for Decisions

The Five Core Principles of Money and Banking

Core Principle 4: Markets Determine Prices

and Allocate Resources
The Five Core Principles of Money and Banking

Core Principle 5: Stability Improves Welfare