Enroll Course: https://www.coursera.org/learn/money-banking
The global financial landscape is complex and ever-evolving. The crisis of 2007-2009 served as a stark reminder that our understanding of monetary systems needs to keep pace with these changes. For anyone seeking a deeper, more nuanced grasp of how money and banking truly function, Coursera’s “Economics of Money and Banking” course, sponsored by the Institute for New Economic Thinking, is a highly recommended journey.
This course offers a refreshing perspective, moving beyond traditional economic models to introduce the “money view.” It begins by framing the monetary system as the essential infrastructure of a decentralized market economy. The early lectures lay a crucial foundation by introducing the balance sheet approach, a powerful analytical tool that is used consistently throughout the course. This method allows for a concrete understanding of how financial transactions impact institutions.
The syllabus then delves into banking as a clearing system, emphasizing the daily settlement constraints faced by participants and the role of money markets in managing these obligations. The course extends this to non-banks and the international monetary system, exploring repo and Eurodollar markets. A key takeaway here is the concept of ‘funding liquidity’ and how market structures facilitate or hinder it.
A significant portion of the course is dedicated to “Banking as Market Making.” Here, banks are conceptualized as dealers in money, supplying market liquidity for a price. This module brilliantly adapts models to explain how banks absorb imbalances in payment flows and how central banks act as dealers of last resort during crises. The midterm exam effectively tests comprehension of these foundational concepts.
The latter half of the course broadens the scope to “International Money and Banking,” examining the global payment system and foreign exchange markets through the money view lens. It tackles puzzles like the failure of uncovered interest parity, offering insightful explanations rooted in dealer market dynamics.
Further exploration into “Banking as Advance Clearing” analyzes capital markets and the pricing of risk in swap markets, again utilizing the money view and adapted models to explain complex financial instruments like interest rate and credit default swaps.
Finally, the course culminates in “Money in the Real World,” tying all the concepts together. It demystifies shadow banking and demonstrates how the money view offers a more comprehensive understanding by highlighting dimensions that standard economic and finance views often abstract away from. The final exam serves as a capstone, reinforcing the value of this new way of thinking.
“Economics of Money and Banking” is not just an academic exercise; it’s an invitation to develop a critical and practical understanding of the financial world. The course is challenging yet rewarding, providing an essential toolkit for anyone wanting to make sense of real-world economic problems. It successfully plants the seed for a deeper, more informed engagement with the economy.
Enroll Course: https://www.coursera.org/learn/money-banking