Scandinavian Working Papers in Economics

Working Paper Series,
Stockholm University, Swedish Institute for Social Research


Ante Farm
Additional contact information
Ante Farm: Swedish Institute for Social Research, Stockholm University, Postal: SOFI, Stockholm University, SE-106 91 Stockholm, Sweden

Abstract: This is an introduction to money and the workings of the financial system. The creation of money is discussed in detail in Chapter 1. Chapter 2 explains how international payments can add to money creation but also generate a new type of money, usually called Eurodollars. Basic securities are defined and characterized in Chapter 3, namely bills, bonds and shares, but basic derivatives, like futures, swaps, and options, are also discussed. Chapter 4 deals with pricing by banks when extending loans, but also with price formation in markets for securities. Chapter 5 surveys possible threats to the financial system and discusses three different approaches to the problem of stabilizing it, namely crisis management, regulation, and structural reforms.

Keywords: Money; interest; securities; payments system; financial system

JEL-codes: E40; E50

78 pages, December 8, 2017

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