Currency markets - spec: Finance and Financial Market

The course is to deliver practical knowledge on functional and institutional aspects of foreign exchange markets. Students will get acquainted with financial institutions, problems of exchange rate policy, and functioning of international currency markets. They will be provided with practical and up-to-date knowledge of foreign exchange markets, such that they can use it effectively in a wide range of future jobs and in private life.

- Financial architecture of the world. Major financial institutions and groups of states – 4 hours

1. The main actors at the international financial scene: states and their organizations, central banks, non-financial transnational corporations, investment, hedge and trust funds, banks, insurance companies and other intermediaries

2. The importance of the leading countries and groups of states (G2, G3, G5, G7, G8, G10 and G20)

3. The main foreign exchange centers of the world and their evolution

4. International Monetary Fund (IMF) as the central bank of the world. The SDR as its quasi currency

5. The Bank for International Settlements (BIS) - a forum for cooperation of the central banks

6. Financial institutions of the European Union

- Functioning of international currency markets – 3 hours

1. Foreign currency as a commodity. Functions of the main currencies (reserve, intervention, investment, transactional and a store of value). Hierarchy of international currencies

2. The concept and the functioning of foreign exchange markets

3. The spot, the forwards, and the futures markets

4. The role of currency speculation

5. The concept of the forex arbitrage

- Exchange rate regimes and policy. Types of money convertibility

- 3 hours

1. The exchange rate as the price of foreign currency. Types of foreign exchange quotations

2. Systems of exchange rates (from fixed to floating)

3. The concept of currency convertibility

4. The typology of currency convertibility

5. Exchange rate stabilization policy

- Foreign exchange policy in transition economies – 2 hours

1. The introduction of the convertibility of the national currency

2. The sequence of the liberalization of the exchange controls and of the internal forex market

3. The problem of maintaining the external equilibrium

4. The evolution of the exchange rate systems in the countries of Central and Eastern Europe

5. The Polish forex system after 1989

- Supranational currency integration – 3 hours

1. Monetary integration as an element of economic integration

2. The concept of an optimal currency area

3. Achievements and prospects of monetary union of the European Union countries

4. Euro as the common currency of the united Europe

J. de Haan, S. Oosterloo, D. Schoenmaker „Financial Markets and Institutions. A European Perspective”, Second Edition, Cambridge University Press 2012

F. S. Mishkin, S. G. Eakins “Financial Markets and Institutions”, Global Edition, Seventh Edition, Pearson Education Limited 2012

R. E. Caves, J. A. Frankel, R. W. Jones „World Trade and Payments: An Introduction” (10th edition), Addison-Wesley 2007

„The Economist”, „Financial Times”

KNOWLEDGE

W1 Has good understanding about the international currency relations, functioning of foreign exchange markets, its various segments, about risks related to various currency instruments, methods to limit these risks; understands world’s financial architecture and monetary integration.

SKILLS

U1 Understands the importance of currency markets, has the ability to analyze various events taking place there, can determine risks related to various foreign exchangel instruments.

SOCIAL COMPETENCES

K1 Can work in a team, both as a member and as a leader. Participation in a team project and presentation

K2 Understands the need to communicate in a professional community and a team. Effectively uses team communication tools to complete assigned projects (Google docs, Dropbox, Skype, other) - assessment based on observed student activity.

1. Making a class presentation with results of home assignments (teamwork)

2. Test