京都大学 京都大学

Financial System and Prudential Policy

Numbering Code G-GAIS00 64046 LB43
G-GAIS00 64046 LB42
G-GAIS00 64046 LB41 		Year/Term 2022 ・ Second semester
Number of Credits 2 Course Type Lecture
Target Year From 1st to 3rd year students Target Student
Language Japanese and English Day/Period Mon.3
Instructor name Not fixed (Kyoto University)
Outline and Purpose of the Course The financial system supports economies through efficient financial intermediation and reliable settlement of funds, and is an important infrastructure that is necessary for societies. However, the soundness of financial system is often threatened by various events such as financial crises, natural disasters, and terrorism. Central banks and other relevant organizations have important responsibilities to control risks related to the financial systems. Also, they must react quickly and appropriately when threats against the soundness of the financial system emerge.

This lecture covers financial system and prudential policy to ensure its soundness. Prudential policy is considered as one of the major roles of central banks, but unlike monetary policy, the responsibility of prudential policy is often shared among a central bank and several public institutions. For this reason, the role of such relevant institutions other than central banks will also be mentioned in the lecture. After completing this course, the student should have the broad knowledge about the financial system. Also, students should have ability to consider themselves on the role of central banks in maintaining soundness of the financial system, the share of the responsibility between a central bank and other institutions, and importance to harmonize prudential policy with monetary policy.
Course Goals By the end of this course, students should:

　　Acquire basic and broad knowledge of the financial system.

　　Understand the importance of the soundness of financial system, the roles of governments and central banks, and the institutional framework for the financial stability through case studies.

　　Have their own views on the financial system and the prudential policy through the lecture, reading the text and references, presentations, and discussions.
Schedule and Contents Basically, lectures are given according to the following plan, but the schedule may be changed based on the incorporation of topics and the progress of the lecture.

1. Introduction
2. Overview of the financial system
3. Prudential policy: micro vs. macro
4. Macroprudential policy
5. Systemic risks and central banks 1: overview
6. Systemic risks and central banks 2: lender of last resort (LLR) function of central banks
7. Japan's experiences of the burst of asset price bubbles in 1990’s and the problem of non-performing loans 1: emergence of asset price bubbles and their burst
8. Japan's experiences of the burst of asset price bubbles in 1990’s and the problem of non-performing loans 2: efforts to dispose non-performing loans
9. The US subprime loan problems and the Global Financial Crisis 1: emergence of the subprime loan problems
10. The US subprime loan problems and the Global Financial Crisis 2: the Global Financial Crisis and responses of major countries against the Crisis
11. Global reforms of financial regulations 1: Basel 3
12. Global reforms of financial regulations 2: reforms of financial regulations in major countries and their assessments
13. Low profitability of Japanese banks
14. Response against unexpected events, such as natural disasters and terrorist attacks
15. Wrap-up
Evaluation Methods and Policy Participation (50%, including attendance, participation in discussions, etc.) and end-of-term reports (50%).
Course Requirements Systematic knowledge of economics are not required, but students are should have strong interests in finance and economy.
Study outside of Class (preparation and review) Preparations required for the lecture will be informed orally. Students are expected to gather and accumulate knowledge of related matters in newspapers and the Internet etc. on a routine basis.
Textbooks Textbooks/References Basic Plus Kinyuu-ron (Basic Plus, Money and Banking) ,2nd Edition, Nobuyoshi Yamori, (Chuo Keizai-sha), ISBN:978-4-502-29051-0, Japanese only. Relevant chapters.
Other materials will be distributed as needed.
References, etc. Gendai-no Kinyuu-Seisaku, Riron-to Jissai (Modern Monetary policy (Modern Monetary Policy in Theory and Practice: Central Banking and Financial Markets), Masaaki Shirakawa, (Nikkei Publishing Inc.), ISBN:978-4-532-13344-3, Japanese only.
Chuo-Ginkou (Central Banks), Masaaki Shirakawa, (Toyo Keizai Inc.), ISBN:978-4-492-65485-9, Japanese only.
Global Kinyu-seid no Subete : Prudence Kantoku-taisei no Shiten (Everything about the global financial system: From the viewpoint of the prudential supervisory system), Tsutomu Fujita, (Kinzai ), ISBN:978-4-322-11978-7
Other materials will be distributed as needed.
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