An old song has it that money makes the world go round. Indeed, money,
the universallyacceptedmeansofexchange, playsapivotalrolein turningthe
wheelsof an increasinglyglobalizedworldeconomy, characterisedby
increasingcross-border trade in goods and services and nancial
transactions. Given the undeniable imp- tance of money for domestic and
international economic dispositions, we therefore do not heed the old
saying The best advice aboutmoney is not to talk aboutit in this book.
On the contrary, we will talk about money quite extensively. At the time
of writing, the global monetary architecture experiences an unpre-
dented credit market turmoil, which started in the US subprime mortgage
market in July/August 2007 and spread to virtually all major nancial
markets. The ultimate consequencesofthis nancialearthquakeare hardto
predictin termsof theirimpact on the global economy and its monetary
order in the years to come. Nevertheless, throughoutour book the reader
will nd plenty of analyses of the factors and events which may have sown
the seeds of the current crisis. With this book we want to provide
students with an integrated overview about themajor buildingblocksof
monetaryeconomics- that are monetarytheory, capital market theory and
monetary policy theory. In doing so, we will draw heavily on the work of
many leading scholars. On top of that, we will provide numerous graphs
and econometric examples, which may help illustrating, and thereby
improving the understanding of, the theoretical issues under review.
