CENTRAL BANKING AND FINANCIAL MARKETS - 2026/7

Module Overview

This module provides an overview of financial markets and central banking, with the emphasis on monetary theory and policy. Specifically, we shall understand the mechanics of the basic New Keynesian DSGE model --- a foundation for monetary policy decisions in modern central banks. We will cover not only theory but also the numerical solution, evaluation, and simulation of the model using MATLAB and Dynare.

Module provider

Economics

Module Leader

ZARETSKI Aliaksandr (Economics)

Number of Credits: 15

ECTS Credits: 7.5

Framework: FHEQ Level 7

Module cap (Maximum number of students): N/A

Module Availability

Semester 2

Prerequisites / Co-requisites

NA

Module content

• Overview of financial markets and institutions, monetary theory and policy
• Money, money supply, open market operations and money creation process
• Overview of the Real Business Cycle (RBC) theory and the classical approach to monetary theory
• Overview of the New Keynesian (NK) approach to monetary theory
• Classical Monetary Model and the optimality of the Friedman rule
• Basic New Keynesian Model, flexible inflation targeting, and optimal monetary policy
• Time permitting, we may also cover: zero lower bound, forward guidance and unconventional monetary policy, interaction with fiscal policy, fiscal theory of the price level, financial stability and macroprudential policy, asset pricing and asset price puzzles, theory of banking, bank runs, and financial crises

Assessment pattern

Alternative Assessment

NA

Assessment Strategy

The assessment strategy is designed to provide students with the opportunity to demonstrate: Familiarity and understanding of the theoretical notions behind central banking and monetary economics as well as being able to showcase the ability to apply these in real life scenarios, as well as, by association, developed their global, resourcefulness and resilience and employability capabilities. Thus, the summative assessment for this module consists of: A test worth 30% of the final grade (linked to learning outcomes 1-3) A final coursework worth 70% of the final grade (linked to learning outcomes 1-4) Formative assessment & feedback Students receive verbal feedback during the in-person lectures. Students are provided with a practice test which they solve independently or in teams. They receive guideline solutions with general feedback and specific feedback in consultation hours.

Module aims

• Introduce students to core advanced concepts in central banking and financial markets.
• Develop an appreciation of the workings of central banks and their activities.
• Systematically and critically understand how central banks conduct monetary policy.
• Be able to critically evaluate benefits and effects of monetary policy on the economy and financial markets.

Learning outcomes

Methods of Teaching / Learning

The learning and teaching strategy is designed to: Explore the theoretical concepts and familiarize with the workings of central banks and conduct of monetary policy. Be able to apply the theoretical concepts learnt in the lectures to real world scenarios. Equip students with the necessary knowledge and skills to enable them to conduct independent research in the field of central banking and financial markets. The learning and teaching methods include: Lectures, which are recorded and disseminated as captured content.

Indicated Lecture Hours (which may also include seminars, tutorials, workshops and other contact time) are approximate and may include in-class tests where one or more of these are an assessment on the module. In-class tests are scheduled/organised separately to taught content and will be published on to student personal timetables, where they apply to taken modules, as soon as they are finalised by central administration. This will usually be after the initial publication of the teaching timetable for the relevant semester.

Reading list

https://readinglists.surrey.ac.uk
Upon accessing the reading list, please search for the module using the module code: ECOM080

Other information

In line with the University's curriculum framework, the School of Economics is committed to developing graduates with strengths in Employability, Digital Capabilities, Global and Cultural Capabilities, Sustainability and Resourcefulness and Resilience. This module is designed to allow students to develop knowledge, skills, and capabilities in the following areas:

Resourcefulness and resilience

Students in this module will develop their understanding and skills through assessment and feedback during lectures. Feedback sessions in class are designed to provide students with the opportunity to ask question and deepen their understanding of the topics.

Global capabilities

Real life examples will be utilized in this module which will build students global capabilities.

Employability

This module will provide students with relevant soft skills to prepare them to successfully compete in the labour market and continuing education.

Programmes this module appears in

Please note that the information detailed within this record is accurate at the time of publishing and may be subject to change. This record contains information for the most up to date version of the programme / module for the 2026/7 academic year.