Money and Banking

Money and Banking examines the critical roles of money, credit, and financial institutions in an economy, exploring the nature of money as a medium of exchange, unit of account, and store of value, as well as the processes of money creation and management by central banks. It also analyzes the structure and operation of the banking system, where commercial banks act as financial intermediaries, channeling funds from savers to borrowers and facilitating the payments system. This field is fundamental to understanding how monetary policy influences interest rates, inflation, and overall economic stability, making it a cornerstone of modern finance and economic management.

1. Introduction to Money
   1. The Nature and Functions of Money
      1. Definition of Money
      2. Characteristics of Money
         1. Durability
         2. Portability
         3. Divisibility
         4. Uniformity
         5. Limited Supply
         6. Acceptability
      3. Functions of Money
         1. Medium of Exchange
            1. Overcoming Barter Limitations
            2. Facilitating Trade
            3. Transaction Costs Reduction
         2. Unit of Account
            1. Standard of Value
            2. Price Quotation
            3. Economic Calculation
         3. Store of Value
            1. Purchasing Power Over Time
            2. Inflation and Store of Value
            3. Alternative Stores of Value
         4. Standard of Deferred Payment
            1. Credit Transactions
            2. Contract Enforcement
   2. The Evolution of the Payments System
      1. Barter and the Double Coincidence of Wants
         1. Limitations of Barter
         2. Transaction Costs in Barter
         3. Emergence of Money
      2. Commodity Money
         1. Historical Examples
            1. Precious Metals
            2. Agricultural Products
            3. Other Commodities
         2. Advantages and Disadvantages
         3. Transition from Commodity Money
      3. Representative Money
         1. Gold Standard Era
         2. Convertibility Mechanisms
         3. Government Backing
         4. Transition to Fiat Money
      4. Fiat Money
         1. Definition and Modern Usage
         2. Trust and Legal Tender
         3. Government Authority
         4. Acceptance Mechanisms
      5. Electronic Money and Digital Payments
         1. Credit and Debit Cards
         2. Online Payment Systems
         3. Mobile Payments
         4. Digital Wallets
      6. Cryptocurrencies
         1. Blockchain Technology
            1. Distributed Ledger Systems
            2. Cryptographic Security
            3. Consensus Mechanisms
         2. Bitcoin and Major Cryptocurrencies
         3. Advantages and Limitations
         4. Regulatory Challenges
      7. Central Bank Digital Currencies
         1. Design Considerations
         2. Implementation Models
         3. Implications for Monetary Policy
         4. Privacy and Security Issues
   3. Measuring the Money Supply
      1. Definition of Money Supply
      2. Monetary Aggregates
         1. M0 (Monetary Base)
            1. Currency in Circulation
            2. Bank Reserves
            3. Central Bank Liabilities
         2. M1 (Narrow Money)
            1. Currency
            2. Demand Deposits
            3. Other Checkable Deposits
            4. Traveler's Checks
         3. M2 (Broad Money)
            1. M1 Components
            2. Savings Deposits
            3. Small Time Deposits
            4. Money Market Deposit Accounts
            5. Money Market Mutual Funds
         4. M3 and Broader Measures
            1. Large Time Deposits
            2. Institutional Money Market Funds
            3. Repurchase Agreements
            4. Eurodollars
      3. The Liquidity Spectrum
         1. Definition of Liquidity
         2. Liquidity of Different Assets
         3. Near Money
         4. Relationship to Monetary Aggregates
      4. Money Supply Measurement Challenges
         1. Financial Innovation Effects
         2. Substitutability of Assets
         3. International Considerations