Free Download Ebook Money Market An Introduction

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ISBN: 978-87-403-0586-9
1 edition
Pages : 138

Ebook Descriptions

The money market has traditionally been defined as the market for short-term marketable debt instruments, such as commercial paper (CP) and treasury bills (TBs). It is much more than this. It embraces all short-term lending and borrowing, marketable and non-marketable, and includes the significant interbank market. It is in this market that interest rates have their genesis. There are three interbank markets: one where the rate is set administratively by the central bank [the policy or key interest rate (KIR), aka bank rate, discount rate, repo rate, etc], one which does not have a rate (there are exceptions), and the other one where banks compete fiercely among one another for reserves (called federal funds in the US) in order to avoid borrowing from the central bank. The outcome of the latter is the bank-to-bank interbank market (b2b IBM) rate and it closely follows the KIR. All deposit rates follow the KIR and the b2b IBM rate, as does the banks’ prime lending rate (PR, a benchmark rate). PR is the target rate of monetary policy, as money (ie, mainly deposits of the private sector) creation is the outcome of bank credit extension (in the main). Thus, monetary policy is aimed at influencing the demand for credit and its outcome, money creation. This economically-significant process plays out in the money market.

Contents

1. Context: the financial system
1. Learning objectives
2. Introduction
3. The financial system
4. Allied participants in the financial system
5. Summary
6. Bibliography
2. Overview
1. Learning objectives
2. Definition
3. Primary money market: supply of and demand for short-term funds
4. Organisational structure of the money market
5. Money (deposit) creation in the money market
6. Interbank deposit / loan market
7. Money market interest rates
8. Money market derivative markets
9. International aspects of the money market
10. Economics of the money market
11. Summary
12. Bibliography
3. Interbank market & monetary policy
1. Learning outcomes
2. Introduction
3. Bank to central bank interbank market (required reserves) (b2cb IBM)
4. Bank to bank interbank market at the final interbank clearing (reserve funds market) (b2b IBM)
5. Central bank to bank interbank market (liquidity shortage) (cb2b IBM)
6. The money market identity / analysis
7. Bank to bank interbank market revisited
8. Summary
9. Bibliography
4. Mathematics
1. Learning objectives
2. Introduction
3. Time value of money concept
4. Simple interest
5. Compound interest
6. Broken periods of less than a year (one interest payment)
7. Discount
8. Effective rate
9. Interest-add-on securities
10. Discount securities
11. Treasury bill tender mathematics
12. Bonds with longer than six months to maturity date
13. Bibliography
5. Deposit & debt securities
1. Learning objectives
2. Introduction
3. Money market interest rates
4. Deposit securities
5. Debt securities
6. Summary
7. Bibliography
6. Derivative instruments
1. Learning objectives
2. Introduction
3. Forwards
4. Money market interest rate future
5. Interest rate swaps
6. Options
7. Derivatives on derivatives
8. Summary
9. Bibliography
7. Endnotes

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Free Download Ebook Banking An Introduction

Detail Informations

ISBN: 978-87-403-0596-8
1 edition
Pages : 144

Ebook Descriptions

This book presents an introduction to private sector banking (as opposed to central banking). Banks are at the very centre of the financial system. They act as intermediaries between all the four sectors of the economy) and all other financial intermediaries. They are also at the very centre of the money market, the market for short-term debt and deposits, marketable and non-marketable, and the interbank markets. They also create the all-important payments system. The banks are unique in that they are able to create new money (by new bank lending), and this is so because money is whatever is generally accepted as the means of payments / medium of exchange: bank deposits (notes and coins make up a minor part of the money stock). Because of this, and other reasons (moral hazard, for example) banks are also inherently unstable, and require robust regulation and supervision. Also because of this, banks are the target of monetary policy implementation.

Contents

Content
1. Essence of banking
1. Learning outcomes
2. Introduction
3. The financial system
4. Principles of banking
5. The balance sheet of a bank
6. Bibliography
2. Money creation
1. Learning objectives
2. Introduction
3. What is money?
4. Measures of money
5. Monetary banking institutions
6. Money and its role
7. Uniqueness of banks
8. The cash reserve requirement
9. Money creation does not start with a bank receiving a deposit
10. Money creation is not dependent on a cash reserve requirement
11. Is “money supply” a misnomer?
12. The money identity and the creation of money
13. Role of the central bank in money creation
14. How does a central bank maintain a bank liquidity shortage?
15. Bibliography
3. Risk in banking
1. Learning outcomes
2. Introduction
3. The concept of risk
4. Interest rate risk
5. Market risk
6. Liquidity risk
7. Credit risk
8. Currency risk
9. Counterparty risk
10. Operational risk
11. Bibliography
4. Bank models & prudential requirements
1. Learning outcomes
2. Introduction
3. Bank models
4. Rationale, objectives & principles of regulation
5. Prudential requirements
6. Bibliography
5. Endnotes

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