Global Banking and Finance Lesson 5 Activities
Global Banking Lesson 5 Hook Why International Finance Matters

Time: 5 minutes
Skills: n/a
Objective 1
Related Resources:
- What if China Collected on U.S. Debt. (2009, November 17). Youtube. Retrieved from: http://www.youtube.com/watch?v=T1dDIrOCbUo.

The instructor shows the class the short Youtube video to get students interested in international financial markets.

Global Banking Lesson 5 Introduction to Financial Markets

Time: 40 minutes
Skills: Holistic Thinking
Objectives 1,2 & 4
Related Resources:
- Banking Lesson 5 PowerPoint 
- Boughton, James. (March 2009). A New Bretton Woods?. Finance and Development, pp. 44-46. Retrieved from: http://www.imf.org/external/pubs/ft/fandd/2009/03/boughton.htm  
- Cooper, Richard. (September 2009). The Future of Dollar. Policy Brief (PB09-21). Peterson Institute for International Economics, pp. 1-6. Retrieved from: http://iie.com/publications/interstitial.cfm?ResearchID=1290.
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Truman, Edwin. (2007, April 17). The Role of US and EU Financial Markets in the Global Economy. Remarks at the conference The Euro and the Dollar: Pillars in Global Finance, Federal Reserve Bank of New York, pp. 1-4. Retrieved from: http://ec.europa.eu/economy_finance/events/2007/20070417/truman.pdf

Before starting the Powerpoint, the instructor should introduce a couple of examples of financial markets, noted in the glossary: capital markets, commodity markets, insurance markets and foreign exchange markets

The instructors lectures and discusses basics of the international financial markets using the lecture notes and the PowerPoint presentation.

Discussion Questions

  1. How do international financial markets function and why do they grow/contract?
  2. What are the upsides and downsides to the growth of financial markets and the factors that lead to their growth: innovation, deregulation, and IT advances?
  3. Who issues/buys/sells stocks and bonds and why? Is the bond market or the stock market bigger and why?
  4. What is the difference between a currency market and the exchange rate?
  5. What are the advantages and disadvantages of having most financial transactions taking place in dollars or Euros?
  6. Why would a country have foreign reserves in a currency belonging to another country?
  7. Why are international financial markets a crucial part of today’s world?

The instructor should end the class with one of the following activities.

Global Banking Lesson 5 Exchange Rate Activity

Time: 15 minutes
Skills: Holistic Thinking and Technology Skills
Objectives 1,2, 3 & 4
Related Resources:
- What do the terms weak dollar and strong dollar mean? (2011, July 4). In Investopia. Retrieved from: http://www.investopedia.com/ask/answers/06/strongweakdollar.asp#axzz1yREg8OR3

Students should read the short Investopia article ahead of time to understand the concept of weak and strong currencies.

The instructor asks the students to do the following:

    • Visit the Web site of a financial institutions and national newspaper that publishes exchange rate among the world’s currencies. Compare the performance of the U.S. dollar against the European euro since a specific date (say Jan 1, 2007). Ask them to find out between that date and now, has the dollar fallen or risen in value against the euro? Students can be asked to draw excel charts.
    • What would happen to the U.S. standing in the world if dollar loses its value against euro? Is the rise of euro as rival currency good for the U.S.? World? Discuss it from the social and political point of view. Ignore technical economic arguments.
Global Banking Lesson 5 China and International Investment Discussion

Time: 15 minutes
Skills: Holistic Thinking
Objectives 1,2 & 3
Related Resources:
- What if China Collected on U.S. Debt. (2009, November 17). Youtube. Retrieved from: http://www.youtube.com/watch?v=T1dDIrOCbUo

The instructors ask the students: Did China make a mistake in holding U.S. dollars? Discuss it from the point of view of China and the U.S.? With respect to the Chinese currency, what is the position of the Obama administration?