Macro Finance and Central Banking

The central bank’s mandate has grown in complexity, and has been refocused around its historical core task of financial stability. A central bank operates at the core of the payment system, serves as lender of last resort, conducts monetary policy, and is often the key prudential regulator.

Basel III has added a novel mandate to control endogenous risk creation over the credit cycle as the dominant macroprudential authority. This complex task requires monitoring systemic risk creation, balancing access to credit and financial stability. Understanding tasks in managing systemic liquidity and correlated risk-taking via macroprudential policy, requires an updated view of macro finance beyond the classic business cycle framing. The course focuses on novel insight since 2009 such as risk creation in a credit cycle, safety demand and challenges posed by structural change. Topics covered include good and bad credit booms, financial stagnation, central bank digital currencies and climate risk impact on financial stability.

The course is graded on a final paper and an eventual presentation. Attendance is strictly mandatory. The course would be ideally placed next to courses in macroeconomics, finance and banking by students interested in the big picture.