Money, Banking, and International Finance introduces the financial system. Students will learn the purpose of financial markets and its relationship to financial institutions. Financial institutions connect the savers to the borrowers through financial intermediation. At the heart of every financial system lies a central bank. It controls a nation’s money, and the money supply is a vital component of the economy. Unfortunately, economists have trouble in defining money because people can convert many financial instruments into money. Thus, central banks use several definitions to measure the money supply. Furthermore, if an economy did not use money, then people would resort to an inefficient system – barter. Unfortunately, this society would produce a limited number of goods and services. Nevertheless, money overcomes the inherent problems with a barter system and allows specialization to occur at many levels.
Money, Banking, and International Finance
