Syllabus

Dates: February 22, 2024 – March 22, 2024

Starting Time: 9:00 am

Guest Speaker: Maurizio Habib, Team Lead Economist at the European Central Bank

Participants: Students of the MSc in European Economy and Business Law and other academic programs

Length of Seminar:  Six morning seminar sessions lasting between two and four hours each

Learning Objectives

The aim of the course is to provide students with an understanding of fundamental concepts that shape the international financial system and the functioning of the international monetary system. It will have predominantly a policy angle from the perspective of a practitioner with particular attention to current issues that are debated by policymakers and financial analysts. It assumes that the students are familiar with basic notions of international economics.

Learning Outcomes

The course aims at providing students with the knowledge of concepts that are familiar to an international economist. Students are expected to learn how to analyse key international trends and understand their relevance for the global economy. It will be particularly useful for students who aim to apply for a position in international financial institutions (e.g. IMF, World Bank), European institutions, in the sell side of investment banks or continue their studies with a PhD in economics with an international angle. Students who want to increase their awareness of the complexity of the modern financial system and its international policy implications will certainly benefit from attending the course.

Programme Description:

TOPIC I - The international financial system and global asset allocation

The first module will introduce a number of basic concepts that are important for the understanding of the modern international financial system, including institutional aspects, elements of theory and policy. The balance of payments. Financial integration. Financial investors active in cross-border activity. The role of (offshore) financial centres and multinational corporations. The costs and benefits of financial openness. Anomalies in international finance: home bias; the Feldstein-Horioka puzzle and deviations from covered interested parity. The drivers of capital flows: push and pull factors. How to deal with volatile capital flows.

TOPIC II – The international monetary system and the dominance of the US dollar

The aim of this second module is to illustrate the centrality of the dollar in the international monetary system and its implications for policymakers in advanced and emerging economies. The functions of money in an international context. A short history of international currencies. What makes an international currency.Search for safety and the accumulation of foreign exchange reserves. The convenience yield of US Treasuries and the safe asset conundrum. The dominant currency paradigm. The role of the US dollar in the propagation of the global financial crisis and the policy response at the international level. US dollar funding in the post-crisis period. The cost and benefits of having an international currency. The relevance of the dollar for policymakers outside the United States. The global financial cycle and the propagation of shocks.

TOPIC III – The future of the international monetary system

This third module will elaborate on the challenges to the current configuration of the international monetary system. Will the dollar lose its dominance? What are the perspectives for the euro? Can the renminbi become a leading international currency? What is the potential of digital currencies in the international monetary system? A taxonomy of digital currencies. Difference between central bank digital currencies, unbacked cryptos and stablecoins. Drivers of crypto trading. Can cryptos be used in international transactions?

Speaker Info

Maurizio Michael Habib is Team Lead Economist in the Directorate General International and European Relations of the European Central Bank (ECB). He manages a small team of economists dealing with issues related to the international monetary system and the international aspects of central bank digital currencies and crypto assets. He’s also the editor of the ECB publication: “The international role of the euro”. His research focuses on international macroeconomic and financial issues, including crypto-assets, investment funds, the global financial cycle and global safe assets. He has published in the Journal of International Economics, the Journal of International Money and Finance, the IMF Economic Review and International Finance, among others. He previously worked at the European Commission in Brussels and holds a MSc in economics from Birkbeck College in London and a Ph.D. in economics from the University of Rome “La Sapienza”. Personal webpage (ECB website):

https://www.ecb.europa.eu/pub/research/authors/profiles/maurizio-michael-habib.en.html

Content

“The international financial and monetary system: from the dollar to cryptos”

Summary

The aim of the course is to provide students with an understanding of fundamental concepts that shape the international financial system and the functioning of the international monetary system. It will have predominantly a policy angle from the perspective of a practitioner with particular attention to current issues that are debated by policymakers and financial analysts. It assumes that the students are familiar with basic notions of international economics.

 Topics

The course will be structured along three modules: 1) the international financial system and global asset allocation; 2) the international monetary system and the dominance of the US dollar; 3) the future of the international monetary system.

1. The international financial system and global asset allocation

The first module will introduce a number of basic concepts that are important for the understanding of the modern international financial system, including institutional aspects, elements of theory and policy. The balance of payments. Financial integration. Financial investors active in cross-border activity. The role of (offshore) financial centres and multinational corporations. The costs and benefits of financial openness. Anomalies in international finance: home bias; the Feldstein-Horioka puzzle and deviations from covered interested parity. The drivers of capital flows: push and pull factors. How to deal with volatile capital flows.

2. The international monetary system and the dominance of the US dollar

The aim of this second module is to illustrate the centrality of the dollar in the international monetary system and its implications for policymakers in advanced and emerging economies. The functions of money in an international context. A short history of international currencies. What makes an international currency. Search for safety and the accumulation of foreign exchange reserves. The convenience yield of US Treasuries and the safe asset conundrum. The dominant currency paradigm. The role of the US dollar in the propagation of the global financial crisis and the policy response at the international level. US dollar funding in the post-crisis period. The cost and benefits of having an international currency. The relevance of the dollar for policymakers outside the United States. The global financial cycle and the propagation of shocks.

3. The future of the international monetary system

This third module will elaborate on the challenges to the current configuration of the international monetary system. Will the dollar lose its dominance? What are the perspectives for the euro? Can the renminbi become a leading international currency? What is the potential of digital currencies in the international monetary system? A taxonomy of digital currencies. Difference between central bank digital currencies, unbacked cryptos and stablecoins. Drivers of crypto trading. Can cryptos be used in international transactions?

Timetable

Exam

Students may earn university credits for this activity if they attend at least 80% of the lectures and pass the final exam. Details about the exam date and the foreseen form of evaluation will be provided by the professor at the start of the seminar.