In part of my new MFin elective Understanding the Global Economy and Financial System I explore the changing views of economists on international trade, which has been one of the most powerful causes of global economic growth over centuries. * The … Continued
The first part of my new MFin elective Understanding the World Economy and Financial System next term will explore the question, why are some countries richer than others? * One of the most important, interesting but hotly contested questions in economics … Continued
Former IMF Chief Economist Eswar Prasad’s excellent book Gaining Currency – The Rise of The Renminbi starts with a fascinating chapter on China’s monetary history, the longest by far of any country. The book is ultimately a persuasive answer to the … Continued
The possibility that central banks might resort to extreme monetary measures, including helicopter money, is much debated in monetary policy circles. But what is “helicopter money”? * In normal times, central banks in developed countries try to control inflation and … Continued
A bond is a long term debt security, which can be issued by a government, company or even a charity. This post describes the main features of bonds. * A bond is a debt security for which the term (maturity) … Continued
Financial services are provided mainly in two ways: by banks and by markets. Here we outline the key features of financial markets * A market is a very general concept of any arrangement which brings together users for mutual advantage. … Continued
One of the three purposes of a financial system is to join savers to investors, to allow funds to flow from people who have a surplus to those who have a deficit (the others are to manage risk and to facilitate … Continued
There are two generic ways in which a company can raise long term funding, which we call capital: debt and equity. Combinations of these, called hybrid capital, are also possible but rare outside venture capital. Any economic agent, including individuals, … Continued
Securities are a very important and useful piece of financial technology, including bank notes, shares and bonds. They make possible a wide range of financial transactions and provide competition to the other main source of funding, banks. * A security … Continued
Exchange rates are among the most important macrofinancial prices, influencing many aspects of an economy. This post introduces exchange rates and their importance for macroeconomic adjustment * What is an exchange rate? An exchange rate is a ratio, the price … Continued
A condition for any market to work well is that consumers have enough information to make good decisions. This is rarely the case with services such as finance. * Theory, backed up by a lot of practical evidence, suggests that … Continued
What exactly is liquidity? The word liquidity is used in many different ways, often confusingly. It’s important to keep clear the centrally important concept of what liquidity is: the ability to turn assets into money quickly and at low cost. … Continued
Exchange rates are ratios of the price of one currency to another. We should be careful about saying “the” exchange rate without being clear as to which particular ratio we mean and why. * Exchange rates often dominate the financial news. … Continued
David Bowie, among his many other creative achievements, was an innovator in finance, with the first ever intellectual property rights securitisation. * Nearly everyone seems to have been affected by the death of David Bowie, a uniquely creative and influential … Continued
On 30 November 2015 the IMF voted to include the RMB (the Chinese “people’s currency” denominated in yuan) in the basket of currencies it uses to calculate the value of the Special Drawing Rights, from October 2016. This is largely … Continued