Money, Banking and Financial Markets 3rd Edition, Cecchetti

Money, Banking and Financial Markets 3rd Edition by Stephen Cecchetti and Kermit Schoenholtz offers student-friendly approach. Students will find the material relevant and interesting because of the book’s unique emphasis on the Five Core Principles, the early introduction of risk, and an integrated global perspective.

By focusing on the big picture via core principles, this book teaches students the rationale for financial rules and institutional structure so that even when the financial system evolves, students’ knowledge will not be out of date. The worldwide financial crisis of 2007‐2009 was the most severe since that of the 1930s, and the recession that followed was the most widespread and costly since the Great Depression. Around the world, it cost tens of millions of workers their jobs. In the United States, millions of families lost their homes and their wealth.

To stem the crisis, governments and central banks took aggressive and, in many ways, unprecedented actions. As a result, change will be sweeping through the world of banking and financial markets for years to come. Just as the crisis is transforming the financial system and government policy, it is transforming the study of money and banking. Against this background, students who memorize the operational details of today’s financial system are investing in a short‐lived asset.

This book focuses on the basic functions served by the financial system while deemphasizing its current structure and rules. Learning the economic rationale behind current financial tools, rules, and structures is much more valuable than concentrating on the tools, rules, and structures themselves. Students will gain the ability to understand and evaluate whatever financial innovations and developments they confront.

This book is organized to help students understand both the financial system and its economic effects on their lives. That means surveying a broad series of topics, including what money is and how it is used; what a financial instrument is and how it is valued; what a financial market is and how it works; what a financial institution is and why we need it; and what a central bank is and how it operates. More important, it means showing students how to apply the five core principles of money and banking to the evolving financial and economic arrangements that they will confront during their lifetimes.

By focusing on the big picture via core principles, students learn the rationale for financial rules and institutional structure. So when the system evolves, their knowledge doesn't immediately get out of date. Rather, they can evaluate and understand any changes that develop. Students will be able to understand what they read in the business press for years to come, regardless of the field in which the student ultimately works.

This book helps students grasp concepts more quickly and less painfully by eliminating more obscure concepts and unnecessary math. Real-world examples that students can relate to are drawn from the business and financial world events to illustrate the rationale behind theory, formulas, and regulations. It represents how the world works more realistically than other books, including a parallel discussion of the world's two most important banks—the Federal Reserve Bank and the European Central Bank (ECB). And unlike most other books, global issues are not segregated in one chapter, but found throughout all chapters. Students will get a more realistic view of how integrated the world economy has become.

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