Money and Central Banking

Module code: EC2051

Money is a fundamental component of how society organises exchange and changes in the value of money - that is, inflation or deflation - and has important consequences for the living standards of the population, as demonstrated by the current cost of living crisis.  How do central banks control inflation?  And what are the effects of monetary policy on the economy?

In order to answer these questions, this module discusses the concept of money and basic financial instruments such as bonds and stocks.  You will then study the banking sector to understand the structure of bank balance sheets, the operations of the bank and the causes of financial crises.  With these topics in mind you will then move onto study the role of central banks in detail, looking at different central bank instruments and what their impact is on financial markets and the banking sector.  A particular focus of the course is also to analyse the impact of monetary policy on the economy through the lens of the AS-AD framework, an important macroeconomic model.