- Technology and Invention in Finance
- Financial Markets: Course Introduction
- Risk and Financial Crises
- Portfolio Diversification and Supporting Financial Institutions
- Insurance, the Archetypal Risk Management Institution
- Barron's Criticism, Determinants of Investment Return
- Lecture 7 - Efficient Markets
- Lecture 8 - Theory of Debt, Its Proper Role, Leverage Cycles
- Lecture 9 - Corporate Stocks
- Lecture 10 - Real Estate Finance
- Lecture 11 - Behavioral Finance
- Lecture 12 - Misbehavior, Crises, Regulation and Self Regulation
- Lecture 13 - Overview of Banks
- Lecture 14 - A Brief History of AIG with Maurice "Hank" Greenberg
- Lecture 15 - Forward and Futures Markets
- Lecture 16 - Banking and Regulations in China with Laura Cha
- Lecture 17 - Options Markets
- Lecture 18 - Monetary Policy
- Lecture 19 - Overview of Investment Banking
- Lecture 20 - Professional Money Managers and Their Influence
- Lecture 21 - Exchanges, Brokers, Dealers, Clearinghouses
Lecture 18 - Monetary Policy
To begin the lecture, Professor Shiller explores the origins of central banking, from the goldsmith bankers in the United Kingdom to the founding of the Bank of England in 1694, which was a private institution that created stability in the U.K. financial system by requiring other banks to have deposits in it.
Turning his attention to the U.S., Professor Shiller outlines the evolution of its banking system from the Suffolk System, via the National Banking era, to the founding of the Federal Reserve System in 1913. After presenting approaches to central banking in the European Union and in Japan, he emphasizes the federal funds rate, targeted by the Federal Open Market Committee, as well as the recent change to pay interest on reserve balances at the Federal Reserve, enacted by the Emergency Economic Stabilization Act from 2008, as important tools of U.S. monetary policy.
After elaborating on reserve requirements, which are liability-based restrictions, and capital requirements, which are asset-based, he provides a simple, illustrative example that delivers an important intuition about the difficulties that banks have faced during the recent crisis from 2007-2008. This leads to Professor Shiller's concluding remarks about regulatory approaches to the prevention of future banking crises.
1. The Origins of Central Banking: The Bank of England
2. The Suffolk System and the National Banking Era in the U.S.
3. The Founding of the Federal Reserve System
4. The Move to Make Central Banks Independent
5. U.S. Monetary Policy: Federal Funds Rate and Reserve Requirements
6. Capital Requirements, Basel III and Rating Agencies
7. Capital Requirements and Reserve Requirements in the Context of a Simple Example
8. Capital Requirements to Stabilize the Financial System in Crisis Times