Wednesday, November 19, 2008

Class 1

This blog is a companion to the course, Topics in contemporary, international finance. Financial topics will be investigated through case studies of actual events and economic policy. Policy and events will be studied from primary and secondary sources. We will use primary sources such United States Federal Reserve reports and United States Department of Labor statistics. We will also read secondary sources such as newspaper articles with a view to analyze how accurately the policy is reported and interpreted. Links to the sources will be posted on this blog.


The first class

Introduction



What is Money?

Evaluate each item below as to how well it would perform the functions of money. In your evaluation, discuss how
well the item would serve as a medium of exchange, a store of value and a standard of value. As you make your evaluations, be sure to consider portability, uniformity, acceptability, durability, and stability in value.
1. Salt
2. Large stone wheels
3. Cattle
4. Gold
5. Copper coins
6. Pieces of paper printed by a government
7. A personal check

Why were roman coins minted with the faces of emperors?

Money and sovereignty. What about the Euro?



The Simple Picture of the International Financial System



Country A's Financial System

Banks


Savers Spenders


Inflation and Unemployment are kept in check by central banks monetary policy such as adjustment of interest rates

The connections between Banks, Savers and Spenders are quite complicated and vary according to national laws and regulation, financial services offered, regional economic conditions.



International- other groupings of Savers and Spenders mediated by banks of other sovereign countries.

B

Save Spend B

Save Spend



B

Save Spend

The connections between banks become complicated and have changed over time, e.g. Bretton Woods, they require currency exchange.

The connections between savers and spenders are quite complicated and vary according to national laws and regulation, financial services offered, regional economic conditions.


Case Study 1999 -Currency Stabilization and Crisis

Two years into the Asian Economic Crisis



http://www.washingtonpost.com/wp-srv/business/longterm/feb99/currency/baby7.htm



http://www.washingtonpost.com/wp-srv/business/longterm/feb99 /currency /currency7.htm





































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