Money and Banking
Assignment and Instructions
Task:
You have four questions (1a, 1b, 2a and 2b), and you need to prepare essay type answers for each of them. Each answer should be around 500 words, in total 2000 words (500 words times 4) for the final exam.
Why and how banks are regulated? (25%)
What are the benefits and drawbacks of using Bitcoin as money? (25%)
2. Explain and critically discuss the following questions.
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. In that context, its challenge at present is to respond to the severe economic and financial disruption caused by the spread of Covid-19. At its meeting ending on 17 June 2020, the MPC voted unanimously to maintain Bank Rate at 0.1%. With reference to this statement, critically discuss what would be the effect of this more conservative (i.e., less expansionary) monetary policy on the market interest rates in the UK? Explain what could be the potential effect of an interest cut for the UK economy? (25%)
Go to https://www.bankofengland.co.uk/statistics/yield-curves and find the most recent UK instantaneous forward curve (gilts) diagrams. Insert the diagrams in your answers. Discuss what these diagrams tell us about the market’s prediction about the movement of the future short-term interest rates and inflation rate. (25%)
Word limit:
Each of the two questions has a word limit of 1000 words, in total 2000 words for the entire assignment. References do not count towards the word limit. Write down the word count at the beginning of the answers.
Reference: Use Harvard at Newcastle style. Please refer to https://libguides.ncl.ac.uk/managing/referencing_styles.
Pre-assessment Support: The last Q&A session will be used as Pre-assessment clinic. The main objective is to clarify the Marking Scheme and to provide guidance on preparation of the assignment. Note I will not read your draft answers or to provide a predicted mark.
Q: Do I need to cite contents from the textbook or lecture slides?
A: Unless for direct quotations, you do not need references for contents in the textbook or lecture slides. Please only use direct quotations when defining concepts. Too many copy-pastes can lead to a fail. Please read the marking criteria for further clarification.
Q: How many references should I include?
A: There is not a requirement for the number of references. It depends on how many you have read. Just an indication, a number of 10 would be suitable.
