Case Study (Financial Globalization and Regional Monetary Integration)
Faculty
Schedule
Winter Semester; Fri.; Time slot #5
Description
- Syllabus (PDF, 38KB attached on 2009-10-19)
This case study will examine the global economic crisis stemming from subprime mortgage loans and financial innovation, and subsequent policy responses. In the summer of 2007, problems began to surface in Bear Sterns and BNP Paribas controlled hedge funds. Decisive liquidity provision by central banks calmed financial markets temporarily until the crisis resurfaced in October following enormous losses from major global banks. Consumer credit tightened ushering in an era of housing investment decline, consumption stagnation, and a widespread deteriorating labor market. In July 2009 solvency concerns in major GSEs like Fannie Mae and Freddie Mac, coupled with the September bankruptcy of Lehman Brothers, froze credit markets. Now, discussions on the creation of a new financial architecture are taking place, including issues of (i) the scope of financial regulation and supervision, and (ii) pro-cyclicality for capital regulation and mark to market valuation. This course will cover issues pertaining to derivatives, off-balance sheet, credit ratings, public fund injections, and GSEs. This year marks 10th anniversary of the birth of Euro. Based on strong political will, Europe achieved a monetary union after the long and enduring process of trade liberalization, customs union and common market formation. An optimal currency area is defined based on (i) similar economic structure, (ii) active movement of capital and labor force and (iii) system of fiscal transfer. By reviewing the European experience, we will discuss the future course of monetary cooperation in Asia.
The class will be conducted in English and active participation will be encouraged. Fluency in English will not be required. Students will form several groups depending on their interests and collectively write a final paper in English.
The course aims to prepare students for future positions, in both the public and private sectors, where an international perspective is required.
Guest speakers from markets and authorities will be invited.
Grading
Grading will be based on class participation (50%) and a report (50%). Active class participation will be highly evaluated, but fluency in English will NOT be necessary.