The world of money, banking, and financial markets is constantly evolving. Every year, people explore new ways to pay for purchases, save for the future, and borrow to meet current needs.
The same things that are reshaping the global financial system also are transforming the study of money and banking. Some old questions are surfacing with new intensity: How can individuals use the changing financial system to improve their lives? How can governments ensure that the financial system remains stable? And how can monetary policymakers keep inflation low, employment high, and both of them stable?
Our purpose in writing this book is to focus 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. It is an approach designed to give students the lifelong ability to understand and evaluate whatever financial innovations and developments they may one day confront.