Money and Monetary Policy

Course Objective

The course aims at equipping students with up-to-date knowledge of money,

central bank and monetary policy. Textbook knowledge is accompanied with
recent developments in the analysis of monetary policy.

Intended Learning Outcomes

By the end of this course, students should be able to:-

1. discuss the functions of money, and how money and credit are created
2. discuss the functions of central bank;
3. compare and contrast the practices of different central banks;
4. explain the objectives of monetary policy and assess how different
monetary policy tools can achieve these objectives;
5. explain why central banks raise and reduce interest rates, and how central
bank adopt QE and reduce the balance sheets

Course Outline

1. What is Money?
I. Uses of money
II. The money multiplier
III. The quantity theory of money

2. Introduction to Major Central Banks

I. The role of central banks
II. Structure and independence of central banks

Central banks to be discussed:

a. Fed
b. ECB
c. BOE
d. BOJ
e. PBOC

3. Monetary Policy
 I. Expansionary and contractionary monetary policies?
II. Traditional monetary policy tools
III. Unconventional monetary policies (with special focus on quantitative
easing and its normalization)

4. The Monetary Policy Transmission Mechanism

I. Interest rate channel
II. Exchange rate channel
III. Credit channels
IV. Other channels