Back in the eighties, some of the most prominent Yugoslavian economists confided/complained to me that as “non-monetarians” they can hardly understand and follow discussions and articles regarding monetary and financial topics: that field, as they said, was somehow abstract, imaginary… I assume that for them, as well as for many economists from younger generations, not to mention non-economists, businessmen/”practical businessmen”, politicians, etc, the World of money and finance is not less abstract and totally transparent even today, after the “financial revolution” “happened” during the previous three-four decades and after the current global economic crisis, if not primarily generated, at least emerged from this field.
Indeed, the contemporary World of finance can hardly be essentially explained and understood if it is observed as an enormous amount of monetary and financial activities which we meet or hear about at every corner: about issuing of money, restrictive or expansive monetary policy, loans and interests, credit cards, cheques, imballances, etc; about numerous accounts at various financial institutional entities, local and foreign currency balances; about audits and supervision; about shares, majority and minority shareholders; about foreign direct investments… portfolio and greenfield investments; about electronic money and electronic payments; about stock exchange and OTC operations, including the electronic forms of trading in securities; about the international financial integration and globalization; and especially about terminology which is still not very much present in our everyday lives, such as the “industry” of pension insurance and some other forms of “industrialization” savings, financial products…; then various kinds of risk management, financial hedging, financial derivates…; and to complete the illustrative numeration with what is perhaps the least understood and it is that, in spite of numerous measures and instruments for hedging, i.e. distribution of risk, it cannot be denied that there is a financial imbalance, financial instability and financial crises, such as - let us mention only a few – the Mexican (“Tequila”) financial crisis, East-Asian financial crisis, Russian currency crisis, Argentinean crisis, and also some financial scandals in large world corporations (microeconomic instabilities, crises and collapses), such as Enron, etc.
Inhaltsverzeichnis (Table of Contents)
- 1. A short introductory look at that mysterious and virtual World of money and finance
- 2. Money - underlying and key category for understanding of the World of money and finance; controversies about the monetary system
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This text aims to demystify the complex world of modern finance and monetary systems. It seeks to provide a clear understanding of the relationship between money and finance, addressing the evolution of money from full-value to fiat currency and exploring the structure and function of financial systems. The text tackles the challenges of defining money in its current context and analyzes the roles of central banks in maintaining financial stability.
- The evolution of money from full-value to fiat currency.
- The definition and functions of money in a modern financial system.
- The relationship between monetary and financial stability.
- The role of central banks in maintaining financial stability.
- The concept of the financial system as an industry of financial services.
Zusammenfassung der Kapitel (Chapter Summaries)
1. A short introductory look at that mysterious and virtual World of money and finance: This introductory chapter sets the stage by highlighting the perceived complexity and opacity of the world of finance, particularly for non-specialists. It argues that despite the apparent chaos and frequent crises, a systematic understanding of the interconnectedness of monetary and financial activities is crucial. The chapter emphasizes the need for a "system approach" to comprehending modern finance and introduces key questions regarding the relationship between money and finance, including the connection between monetary and financial stability and the role of central banks. The text subtly foreshadows the systemic nature of finance, implying that understanding the underlying structures is vital to navigating its complexities. It sets the stage for deeper dives into the nature of money and the financial system in subsequent chapters.
2. Money - underlying and key category for understanding of the World of money and finance; controversies about the monetary system: This chapter delves into the fundamental nature of money, challenging common misconceptions about its value and impact. It traces the evolution of money from full-value currency to modern fiat money, highlighting the significant transformations in its form and function. The author critically examines various definitions of money, arguing against overly simplistic explanations and stressing the need for a nuanced understanding of its evolving role. The chapter also introduces the concept of money's functions, emphasizing that although the functions remain relatively constant, the underlying nature of money has changed dramatically. This evolution is crucial in understanding the complexities of today's financial system, prompting further exploration of the interplay between money, finance, and the related concepts of stability and instability. The chapter concludes by emphasizing the need for a sophisticated approach to understanding the concept of money in the context of modern finance.
Schlüsselwörter (Keywords)
Money, finance, monetary system, financial system, fiat money, full-value money, monetary stability, financial stability, central banks, financial industry, financial services, economic crisis.
Frequently Asked Questions: A Short Introductory Look at That Mysterious and Virtual World of Money and Finance
What is the overall purpose of this text?
This text aims to demystify the complex world of modern finance and monetary systems. It strives to provide a clear understanding of the relationship between money and finance, covering the evolution of money and exploring the structure and function of financial systems. It addresses challenges in defining money and analyzes the roles of central banks in maintaining stability.
What are the key themes explored in the text?
Key themes include the evolution of money from full-value to fiat currency; the definition and functions of money in modern systems; the relationship between monetary and financial stability; the role of central banks; and the financial system as an industry of financial services.
What topics are covered in Chapter 1: "A short introductory look at that mysterious and virtual World of money and finance"?
Chapter 1 introduces the perceived complexity of finance, emphasizing the need for a systemic understanding of monetary and financial activities. It highlights the connection between monetary and financial stability and the role of central banks, setting the stage for a deeper exploration of money and the financial system in subsequent chapters.
What topics are covered in Chapter 2: "Money - underlying and key category for understanding of the World of money and finance; controversies about the monetary system"?
Chapter 2 delves into the fundamental nature of money, tracing its evolution from full-value to fiat currency. It critically examines various definitions of money, emphasizing the need for a nuanced understanding of its evolving role and functions. The chapter explores the interplay between money, finance, stability, and instability, advocating for a sophisticated approach to understanding money in modern finance.
What are the key words associated with this text?
Key words include: Money, finance, monetary system, financial system, fiat money, full-value money, monetary stability, financial stability, central banks, financial industry, financial services, economic crisis.
What type of content is included in this preview?
This preview provides a comprehensive overview including the title, table of contents, objectives and key themes, chapter summaries, and keywords.
Who is the intended audience for this text?
While not explicitly stated, the text appears geared towards those seeking a foundational understanding of money and finance, possibly students or individuals with limited prior knowledge in the field. The demystifying approach suggests a target audience that may find the subject initially challenging.
- Quote paper
- Professor Dr Stanko Radmilovic (Author), 2012, Money and Finance. Creation, features, and functions, Munich, GRIN Verlag, https://www.grin.com/document/267465
