Monetary Policy and Central Banking

About Course

Course Overview:
This course offers a comprehensive exploration of monetary policy and the role of central banking in modern economies. It provides an understanding of the tools, mechanisms, and objectives of monetary policy, as well as the functions and structure of central banks. Students will engage with both theoretical concepts and practical applications of monetary policy in a global context, analyzing its impact on inflation, employment, economic growth, and financial stability

Learning Outcomes:
Upon completing this course, students will be able to:
1. Understand the Key Objectives and Functions of Central Banks: Identify the role of central banks in modern economies and their influence on financial stability and economic growth.
2. Apply Monetary Policy Tools: Analyze and evaluate the effectiveness of various monetary policy tools, such as interest rate adjustments, open market operations, and quantitative easing.
3. Assess the Impact of Monetary Policy: Understand how central bank decisions affect macroeconomic variables such as inflation, employment, exchange rates, and overall economic stability.
4. Evaluate Global Monetary Policy Frameworks: Compare and contrast the different monetary policy frameworks employed by central banks worldwide and their implications for global financial markets.
5. Analyze Financial Stability Concerns: Understand the relationship between monetary policy and financial stability, including how central banks respond to financial crises.
6. Discuss Contemporary Challenges: Identify current and emerging challenges for monetary policy, such as digital currencies, climate change, and the evolving global economy.

Course Content

Introduction to Monetary Policy

Overview of monetary policy
History and evolution of monetary policy
Objectives of monetary policy (price stability, employment, economic growth)
The role of central banks in economic management

About Course

What Will You Learn?

Course Content

Introduction to Monetary Policy

Overview of monetary policy

History and evolution of monetary policy

Objectives of monetary policy (price stability, employment, economic growth)

The role of central banks in economic management

Central Banking: Structure and Function

The role and functions of central banks (e.g., lender of last resort, regulating money supply)

Structure of central banks (e.g., Federal Reserve, European Central Bank, Bank of England)

Independence and accountability of central banks

Organizational and governance frameworks

Monetary Policy Tools and Instruments

Interest rate policies (e.g., discount rate, federal funds rate)

Open market operations (OMOs)

Quantitative easing and unconventional monetary policies

Reserve requirements and their influence on lending

Monetary Policy Transmission Mechanisms

How changes in monetary policy affect the economy

Channels of transmission: interest rates, credit, exchange rates

The role of expectations in shaping the effectiveness of monetary policy

Financial market reactions and the importance of forward guidance

Inflation Targeting and Price Stability

The concept of inflation targeting

The Taylor Rule and other policy rules

Evaluating the trade-offs between inflation and employment

The challenges of maintaining price stability in the context of global factors

Monetary Policy and Financial Stability

The intersection between monetary policy and financial stability

Central banks’ role in financial crises (2008 global financial crisis, COVID-19 pandemic)

Macroprudential policy and regulatory tools

Systemic risk and the role of central banks in preventing financial instability

Global Perspectives on Monetary Policy

Comparison of monetary policy frameworks across different regions (U.S., EU, emerging markets)

The impact of global economic conditions on national monetary policy decisions

The role of international institutions (IMF, World Bank) in shaping monetary policy

The global implications of central bank actions (e.g., currency wars, spillovers)

Contemporary Issues in Monetary Policy

The impact of digital currencies and fintech on monetary policy

Central bank digital currencies (CBDCs): opportunities and challenges

The role of central banks in combating climate change through monetary policy

The future of monetary policy in a changing global landscape