1. Introducing Money, Banking, and Financial Markets
Chapter 1
Introducing Money, Banking, and Financial Markets

2. Table of Contents, Glossary, Index Key Words (Vocabulary)
Lesson 1 Objectives
Table of Contents, Glossary, Index
Key Words (Vocabulary)
Why study money, banking and financial markets?
Introduction of Concepts
Activity – Writing a Check
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3. 1. Table of Contents, Glossary, Index
Table of Contents vii – xxii
What we will cover in this class:
Part I – The Basics
Part II – Financial Instruments & Markets
Part III – Banks & Other Financial Intermediaries
Part IV – Will not cover
Part V – The Art of Central Banking
Part VI – Monetary Theory
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4. 1. Table of Contents, Glossary, Index
Glossary (pages )
Definitions of Key Words (Vocabulary) – These are financial terms, words you will need to know.
You will also find a glossary on my website:
Index (pages )
The placed to look to find the page for important words and concepts.
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5. Financial Institutions – p. 3, 597 Financial Intermediaries – p. 597
2. KEY WORDS - VOCABULARY
Financial Markets – p. 3, 597
Financial Institutions – p. 3, 597
Financial Intermediaries – p. 597
Money – p. 3, chapter 2
Demand Deposits (Checking Accounts) – p. 14 Chapter 2, 593, 594
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6. Federal Reserve, Central Bank, The “FED” – p. 4, 596
2. KEY WORDS - VOCABULARY
Banking and Banks – p.3
Federal Reserve, Central Bank, The “FED” – p. 4, 596
Federal Deposit Insurance Corporation (FDIC) – p. 6, 596, 614 (10-11, 292, 294)
Bank Examiner – p. 6, 10, 11
Loan Officer – p. 6, 266
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7. Why Study Money, Banking, and Financial Markets? For discussion
To examine how financial markets such as bond, stock and foreign exchange markets work
To examine how financial institutions such as banks and insurance companies work
To examine the role of money in the economy
To find out about jobs and a career
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8. 3. Introduction of Concepts
Financial Markets/Institutions
Bringing together of buyers and sellers of financial securities (stocks and bonds) to establish prices
The place that brings buyers and sellers together to value financial assets
Provides a way for those with money (savers) to lend to those who need money or funds [borrowers]
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9. Financial Markets – Another way to define markets
Markets in which funds are transferred from people who have an excess of available funds to people who have a shortage of funds
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10. 3. Introduction of Concepts
Financial Intermediaries are
Institutions 中介 Zhōngjiè such as: Banks
Savings and Loans
Credit Unions
Investment Banks and Brokers
Mutual Fund Companies
Stock and Bond Markets
Insurance Companies
Pension Fund (retirement) Companies
We will learn more about these institutions later in the course,
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11. Explanation of terms For purposes of this class, the terms:
Financial Intermediary
Financial Institutions
Banks
Basically mean the same thing!
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12. 3. Introduction of Concepts (Cont.)
Money
“Lubricant that greases the wheels of economic activity”
Not just currency (bills and coins)—also includes demand deposits (checking accounts) issued by banks
Plays a key role in influencing the behavior
行为 Xíngwéi of the economy as a whole and the performance of financial institutions and markets
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13. Introduction of Concepts (Cont.)
Money (Cont.)
Is more than just what we spend but refers to the monetary economy
Makes for easy transactions 交易 Jiāoyì within the economy
Principal “machine” through which central banks attempt to influence total, or all economic activity
Economic Growth
Employment
Inflation
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14. In Class Activity 4. Writing a check – checking account
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15. Check writing continued
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16. Check writing Continued
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17. Checking writing continued
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18. In class activity
Write out a check using the previous guideline for an item you would like to buy. What would it cost? Examples:
Phone
Computer
Train ticket home
Textbook for school
Gift for a friend
Present for your teacher!
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19. Introduction of Concepts (Cont.)
Banking
Banks and other financial intermediaries
(中介 Zhōngjiè) take funds from one group (savers) and transfer these funds by investing or lending (borrowers).
Banks provide a place where individuals and businesses can invest their funds to earn interest with a minimum of risk
Equipped to invest in the most challenging types of financial investments—loans to individuals and small businesses
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20. Introduction of Concepts (Cont.)
Banking (Cont.)
Banks serve as the main institution of the economy’s money supply, and along with other financial intermediaries, provide important source of funds
Banks are intimately involved in how the central bank of the United States (Federal Reserve) [Fed] influences overall economic activity
Monetary policy—the Fed directly influences the lending and deposit creation activities of banks
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21. Chapter Summary
Savers and borrowers are the prime players in setting the prices in the financial markets.
Financial intermediaries (institutions such as banks) are the players who bring together the savers and borrowers together.
Money is the “tool” that fuels or makes the economy go.
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22. Chapter Summary
The Central Bank or the “Fed” (in the US) influences the economic activity of a country creating the monetary policy.
The FED directly influences the activity of the financial intermediaries or banks which in turn affects the behavior of the savers and borrowers and the use of money.
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23. COURSE OVERVIEW ILLUSTRATION
Savers Borrowers
and and
Lenders Spenders
Financial Intermediaries
(Banks)
Financial Markets
Money +
Fed =
Monetary Policy
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24. Homework – Savers and Borrowers Activity
SAVERS – Questions to consider
How have you made money?
What kind of jobs have you had?
How much money have you saved?
How much do you invest? In real estate? In stocks or bonds?
How do you spend your money?
Budget?
Income Expenses
You will have a leader, spokesman, a secretary, treasurer, assistant leader and researcher in your group
Team name for your group:_________________________________
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