This course is an introduction to monetary economics and its policy applications in a Canadian setting. Attention is directed to the microeconomic aspects of financial intermediation, including the role of deposit-taking institutions and the re-regulation of the financial markets. The term structure of interest rates and the concepts of duration and interest rate risks are also considered. The course concludes with an examination of the conduct of monetary policy by the Bank of Canada under different policy and exchange rate systems.
- Introduction: role of money and the payments system.
- Financial instruments and financial markets.
- Yield differentials and the impact of inflation and taxation on interest rates.
- The term structure of interest rates.
- The theory of financial intermediation.
- Management of interest rate risks and the concept of duration.
- Public policy issues in the financial system, Bank Act revision and re-regulation of the financial markets.
- Deposit expansion by chartered banks and near banks and the determinants of the money demand and money supply process.
- Bank of Canada and the conduct of monetary policy under different policy regimes.
Methods of Instruction
Lectures and seminars which will be devoted to discussions of the major issues in monetary economics and the recent developments in the financial markets.
Means of Assessment
|| 30% - 70%
|| 0% - 20%
|| 30% - 40%
|| 0% - 10%
THERE WILL BE A MINIMUM OF THREE (3) EVALUATIONS.
To introduce students to the elements of monetary economics and the role of deposit-taking institutions in the process of financial intermediation in the payments system. At the end of the course, the student will be able to:
- demonstrate an understanding of the functions of money, and other basic financial instruments, the credit creation process and competing theories of financial intermediation.
- demonstrate an understanding of the various theories of the term structure of interest rates, the real rate of interest and the impact of inflation and taxation on the pattern of interest rates.
- demonstrate an understanding of the concepts of duration and management of interest rate risks by financial institutions.
- explain the rationale for the revisions of the Bank Act, and the re-regulation of the financial markets -- including the role of deposit insurance.
- analyse the determinants of the money demand and money supply processes in the context of the conduct of monetary policy by the Bank of Canada.
Course Guidelines for previous years are viewable by selecting the version desired. If you took this course and do not see a listing for the starting semester/year of the course, consider the previous version as the applicable version.
Below shows how this course and its credits transfer within the BC transfer system.
A course is considered university-transferable (UT) if it transfers to at least one of the five research universities in British Columbia: University of British Columbia; University of British Columbia-Okanagan; Simon Fraser University; University of Victoria; and the University of Northern British Columbia.
For more information on transfer visit the BC Transfer Guide and BCCAT websites.
If your course prerequisites indicate that you need an assessment, please see our Assessment page for more information.