COURSE INFORMATION Course Title: MONETARY THEORY AND POLICY I

Code	Course Type	Regular Semester	Theory	Practice	Lab	Credits	ECTS
ECO 331	B	5	4	0	0	4	5

Academic staff member responsible for the design of the course syllabus (name, surname, academic title/scientific degree, email address and signature)	NA
Main Course Lecturer (name, surname, academic title/scientific degree, email address and signature) and Office Hours:	Dr. Chrysanthi Balomenou cbalomenou@epoka.edu.al , Thursday 10:30 am - 12:30 pm
Second Course Lecturer(s) (name, surname, academic title/scientific degree, email address and signature) and Office Hours:	NA
Teaching Assistant(s) and Office Hours:	NA
Language:	English
Compulsory/Elective:	Compulsory
Study program: (the study for which this course is offered)	Bachelor in Economics (3 years)
Classroom and Meeting Time:	E-B33 Thursday 13:40 - 17:30
Code of Ethics:	Code of Ethics of EPOKA University Regulation of EPOKA University "On Student Discipline"
Attendance Requirement:	A minimum rate of 75% is required for the student to enter the final examination.
Course Description:	Monetary Theory and Policy I: Determining, implementing, and evaluating monetary and fiscal policy; effect on the economy, monetary targets and indicators; role of interest rates in understanding monetary policy, the effects of monetary policy on different sectors; role of fiscal policy in the economy.
Course Objectives:	Basing on the above mentioned description, aim of this Thematic Subject is, mainly, to provide the students a clear understanding of the following concepts and mechanisms: a) The economic significance, the definitions and the types of money, the quantity and the value of money as well as the determinants which affect the demand for and the supply of money in the framework of the relevant fundamental theories and rules. b) The operation of the financial system both within a closed as well as in open economy. c) The international and the European legal and regulatory framework with respect to the operation and regulation of the banking sector as well as of the monetary system. Highlighting the Financial Crises contagion, focusing on the crucial role for the maintenance of the financial stability, of 1. The Lender of Last Resort (classical-contemporary performance). 2.The Financial/Banking Safety Net and the Institution of the European Banking Union which main objective is to break the vicious cycle of the Sovereign – Banking Nexus, between weak banks and heavily indebted countries. Basing on the above mentioned description, the course aims, at offering students a detailed viewpoint and informed insight into the monetary policy process, the regulation and supervision of the financial system, the emerging, from the financial crises, systemic risk contagion and its handling by the newly established regulatory legislation. In addition, some crucial dilemma for the Monetary policy makers are going to be analyzed. Finally, hot issues like the impact of COVID-19 on the monetary strategies.

BASIC CONCEPTS OF THE COURSE

1	Banking Safety Net
2	Benefits and Drawbacks of EBU
3	Lender of Last Resort Facility (LOLR)
4	International central banking institutions’ conventional and unconventional policies

COURSE OUTLINE

Week	Topics
1	Introduction of the syllabus, academic writing rules (a refreshment of the already taught in the first-year key elements of the academic writing well-adjusted to the needs of the course) and discussion on the indicative project topics. More specifically we are going to analyze the key parts of the syllabus and afterwards we will be based on the way that we are going to proceed with the elaboration of the team working projects. In order the students to be facilitated more, during this introductory lecture it will be presented some indicative topics or in a broader way reliable scientific areas of the examining field, which could be chosen purely by the students or they can be based on them in order to form their own topic.
2	Banking Safety Net and its main components - Banking Safety Net and the vicious cycle of sovereign banking nexus (ECB Working Paper Series: Managing the sovereign-banking nexus, 2018, p.5-7, 35-40). In this lecture, it is presenting: 1) The necessity of the establishment of the Financial – Banking Safety Net (ECB Working Paper Series: Managing the sovereign-banking nexus, 2018, p.23-28), 2)The problems and main components and goals of the it, 3)Time evolution of the changes made to the monitoring - management of the Financial Safety Net assets, 4)The status of the Financial Safety Net, before and after the European Banking Union’s establishment, 5)Market Discipline Mechanism vs Financial Safety Net.
3	The new institution of the European Banking Union (EBU): scope, aims and structure - new regulatory framework of EBU (The Banking Union - a European perspective: reasons, benefits and challenges of the Banking Union, Speech by Yves Mersch, Member of the Executive Board of the ECB, at the seminar “Auf dem Weg zu mehr Stabilität – Ein Dialog über die Ausgestaltung der Bankenunion zwischen Wissenschaft und Praxis“ organized by Europolis and Wirtschaftswoche, Berlin, 2013) This week's lecture is dealing with the new trends in the comparative banking under the umbrella of the new regulatory framework of EBU (European Banking Union), having being structured as follows: First part: a)EBU's Mission and Scope, b)EBU's Participants, c)EBU's 3 main Pillars/Mechanisms: c/1) The Single Supervisory Mechanism (SSM: establishment, function, tasks, objectives, main principles, Cooperation with other European institutions and bodies and Legislative-regulatory framework), c/2)The Single Resolution Mechanism (SRM: Establishment – Function, Main components and their tasks and missions, Main tools - Restructuring Plans: 1)General characteristics - Importance. 2)Living will, 3)Their components (Recovery and Resolution Plans' objectives and activation),c/2a) SRM cooperation with SSM and potential forms of this cooperation, c/3) Legislative- Regulatory framework, d)Harmonized deposit guarantee Scheme (HDGSs: Establishment – Objectives, Legislative- Regulatory framework.
4	Benefits and Drawbacks of EBU (The Political Economy of European Banking Union, by Oxford University Press, 2016, p.8-24) as key drivers for the comparative banking enhancement drawbacks (The Political Economy of European Banking Union, by Oxford University Press, 2016, p.206-214). In this week’s lecture we are going to be concentrated on a sort of SWOT analysis, pinpointing the main strengths and weaknesses as far as the deriving opportunities and threats from the establishment and operation of the EBU’s innovative institution.
5	Lender of Last Resort Facility (LOLR): Classical version and its relevant critical analysis, justifying the backing of the secondary Banking System (Commercial, Retail, Investment and Corporate Banking), by the Central Bank at national and European level, under circumstances of economic normalcy (Financial Crises, Contagion, and the Lender of Last Resort, by Oxford University Press, 2009, p.109-126) (ECB Working Paper Series: Benefits and Costs of liquidity regulation p.7, 13, 34). Here, we are going to critically explain scientific topics referring to the history of the definition of the LOLR and its origin as one of the main components of the Financial Safety Net (Financial Stability and Prudential Regulation, Lui 2017, p. 18, 19). Afterwards, we are elaborating a comparison analysis between LOLR, Emergency Liquidity Assistance (ELA) (Emergency Liquidity Assistance and Systemic Risk, Lastra, p.236, 239, 241, 254, 260)(Banking and Finance Law Review, Revisiting the LOLR, p.456) and The European Financial Stability Fund (EFSF). Furthermore, this chapter is focusing on a very detailed presentation of the function and main principles of the classical version of LOLR, highlighting the huge importance of its 2 main components: Moral Hazard and Deliberate Constructive Ambiguity. Campbell, A.& Lastra R, 2009, p.464-465 Herr, H,2014, p.60-61
6	Lender of Last Resort Facility (LOLR): Revised Version and its relevant critical analysis, justifying the backing of the secondary Banking System (Commercial, Retail, Investment and Corporate Banking), by the Central Bank at national and European level, under circumstances of turmoil and financial crises (Financial Crises, Contagion, and the Lender of Last Resort, by Oxford University Press, 2009, p.169-186) (Banking and Finance Law Review, Revisiting the LOLR, p.490-495). Additionally, in this week' s lecture we are focused on a detailed description and critical explanation of the alterations of each one of the previously presented principles, under the classical version of LOLR facility that are absolutely necessary to be done in order to meet the needs of a recession period. In parallel, special attention is paid to the respective modifications of the components of LOLR, in turmoil periods.
7	Revision. We are recapping all the already taught subjects, by pinpointing the highlights of them concentrating on those that are needing, due to their nature, more attention in terms of critical analysis and combination of different reliable topics.
8	Midterm Exam
9	Presentation of group projects. The students divided into groups composed of 3-5 members are presenting, using power point system, their teamworking projects, that have been previously submitted to their professor. Each team member is presenting his/hers's own contribution part of the project presentation.
10	International central banking institutions’ conventional and unconventional policies in times of financial crisis - ECB, FED and BoE conventional and unconventional policies during recession periods (The Political Economy of European Banking Union, Howarth and Quaglia, 2016, p. 158-174) (The Importance of a Banking Union and Fiscal Union for a Capital Markets Union, Acharya and Steffen, 2017, p.22, 23). During this week’s lecture, in a more detailed way, we are focusing, firstly on the first phase and afterwards on the second one of the Global Financial Crisis, pinpointing the key strategies and policies that were adopted and implemented in both sides of the Atlantic by the Central Banking in order to support the Secondary Banking and in a broader way the Financial Stability, as far as the Economic Development and Growth, highlighting and justifying relatively, why the prioritization of the goals is subject to the mission of each one of the Banks (FED, ECB, BoE mainly), as referred on the respective Treaties. The whole theoretical grounds are accompanying by reliable authentic statistics (Monetary Policies, Banking Systems, Regulatory Convergence, Efficiency and Growth in the Mediterranean, Ayadi and Mouley, 2014, p. 67, 68, 69).
11	Monetary policies' new transmission channels as a response to COVID-19 pandemic crisis in both sides of the Atlantic - ECB and FED conventional and unconventional policies as a response to the pandemic crisis. In the first part of the lecture we are examining separately each one of the cases, underlying the challenges posed by the pandemic into the Banking Sector (ECB Working Paper Series: The great lockdown: pandemic response policies and bank lending conditions, p. 23-26). Moreover, in the second part, we are presenting, per case, the forceful monetary and fiscal policy measures applied during the crisis, which have enabled the financing costs of European and American banks (Congressional Research Service: The FED’s response to pandemic crisis: Policy Issues, p. 15-19) to remain very low and consequently to alleviate the deriving difficulties. In the third part, we are filtering the main differences that are focusing mainly on the fact that in the case of Europe, we should take into consideration the Fiscal policy measures (i.e. Recovery and Resilience Facility fund) due to the absence of common fiscal policy. On the other hand, in the US, due to the existence of the common Fiscal Policy, the monetary issues towards the bad effects of the pandemic crisis are analyzed in more details. At last, into our conclusions part it is figuring out that it has to be pursued by all central banks, the close monitoring of financial institutions and markets, to ensure that they continue to provide the needed credit flow to the economy, and of financial stability risks stemming from this crisis. Similarly, it must continue to adopt measures to ease the new risks and, naturally, stand ready to provide an appropriate International response should such risks materialize, in the framework of a global banking regulation and close cooperation and by involving a wide range of stakeholders.
12	Comparison analysis between ECB's and FED's responses to the pandemic crisis and its related dilemmas. Actually, during this week’s lecture, we are attempting at cultivating more the critical thinking of the students, by combining a comparison analysis, having as a basis the week’s before lecture and being extended more by including of some critical dilemmas like: Risk management vs Standard economic policy, Credit Easing vs Quantitative Easing, Conventional vs Unconventional monetary policies and relevant SWOT ANALYSIS and Rules vs. Discretion in Monetary Policy under the Banking Sector (Teaching notes on Critical analysis between ECB’s and FED’s unconventional monetary policies during the second phase of the crisis, Balomenou 2020). At last, recapping all the already mentioned, we are pinpointing what lessons could be learned in the light of the current financial crisis, in order for the Banking System to remain resilient and stable financially (ECB’s Working Paper Series: Monetary policy and its transmission in a globalized world, p. 23, 35, 40, 48).
13	The sovereign banking nexus and its management. Banking Safety Net and the vicious cycle of sovereign banking nexus (ECB Working Paper Series: Managing the sovereign-banking nexus, 2018, p.5-7, 35-40). In this lecture, the following points are being presented: 1) The necessity of the establishment of the Financial – Banking Safety Net (ECB Working Paper Series: Managing the sovereign-banking nexus, 2018, p.23-28), 2)The problems and main components and goals of the it, 3)Time evolution of the changes made to the monitoring - management of the Financial Safety Net assets, 4)The status of the Financial Safety Net, before and after the European Banking Union’s establishment, 6)Market Discipline Mechanism vs Financial Safety Net.
14	Revision. We are summing up all the already taught subjects, by pinpointing the highlights of them concentrating on those that are needing, due to their nature, more attention in terms of critical analysis and combination of different reliable topics.

Prerequisite(s):	NA
Textbook(s):	Textbook: The Economics of Money, Banking and Financial Markets, F.S.Mishkin, 10.th ed., Pearson International Ed.; Howarth.D & Guaglia, L. “The Political Economy of European Banking Union”,2016,Oxford University Press;Goodhart.Ch, & Illing.G, “Financial Crises, Contagion, and the Lender of Last Resort” A Reader,2009, Oxford University Press, Arestis.P, & Sawyer.M,(Ed), “The Euro Crisis”, 2012, International Papers in Political Economy, Palgrave Macmillan, McDowell.D, “Brother can you spare a Billion? The United States, the IMF, and the International Lender of Last Resort, 2017, Oxford University Press. Other References: Lectures and the materials prepared by the Lecturer; nominated articles and recent speeches on Monetary Theory and Policy; Dimsdale.N, &Hotson.A, (Ed),”British Financial Crises since 1825”, 2014, Oxford University Press., Siebert, H (Ed), “The World’s New Financial Landscape: Challenges for Economic Policy”, 2001, Springer. "International Economics" Pearson, 2015.
Additional Literature:	NA
Laboratory Work:	NA
Computer Usage:	NA
Others:	No

COURSE LEARNING OUTCOMES

1	Specify the institutional framework of the European Union's single banking market and how it is going to be influenced or affected after COVID-19.
2	Examine the role and the structure of banking safety net.
3	Assess and critically analyze the vicious cycle of sovereign banking nexus and learn how to manage it..
4	Articulate and discuss the way in which the monetary system and financial institutions are controlled and supervised.
5	Compare the differences between conventional and unconventional monetary policies adopted and implemented by the central banking especially in periods of crisis (financial - pandemic).
6	Describe and explain the classical and revised versions of lender of last resort and examining the role of the central banks in providing the lender of last resort.
7	All the above mentioned are based on the relevant literature and high quality hot topics on the field and justified by the specific theories.

COURSE CONTRIBUTION TO... PROGRAM COMPETENCIES (Blank : no contribution, 1: least contribution ... 5: highest contribution)

No	Program Competencies	Cont.
Bachelor in Economics (3 years) Program
1	Students define the fundamental problems of economics	5
2	Students describe key economic theories	4
3	Students critically discuss current developments in economics	5
4	Students appropriately use software for data analysis	3
5	Students critically contextualize the selection of an economic problem for research within scholarly literature and theory on the topic	5
6	Students apply appropriate analytical methods to address economic problems	4
7	Students use effective communication skills in a variety of academic and professional contexts	4
8	Students effectively contribute to group work	5
9	Students conduct independent research under academic supervision	5
10	Students uphold ethical values in data collection, interpretation, and dissemination	4
11	Students critically engage with interdisciplinary innovations in social sciences	5
12	Student explain how their research has a broader social benefit	4

COURSE EVALUATION METHOD

Method	Quantity	Percentage
Midterm Exam(s)	1	30
Term Paper	1	20
Final Exam	1	40
Attendance		10
	Total Percent:	100%

ECTS (ALLOCATED BASED ON STUDENT WORKLOAD)

Activities	Quantity	Duration(Hours)	Total Workload(Hours)
Course Duration (Including the exam week: 16x Total course hours)	16	4	64
Hours for off-the-classroom study (Pre-study, practice)	10	2	20
Mid-terms	1	12	12
Assignments	1	10	10
Final examination	1	14	14
Other	1	5	5
Total Work Load:			125
Total Work Load/25(h):			5
ECTS Credit of the Course:			5

CONCLUDING REMARKS BY THE COURSE LECTURER

All the expected course learning outcomes were met successfully. The course contributed to the enrichment of students' knowledge since the examined topics had combined the theoretical grounds of the taught scientific field with the needs of the relevant industry.