Video Labs: Chapter #14-Understanding the Financial System, Money, and Banking

Introduction to Financial Markets - The Financial System


This video discusses the financial system comprised of surplus units (who are lending their savings funds) and deficit units (who are borrowing funds by issuing primary securities to the financial market).  Direct financing and investment occurs between surplus and deficit units.  A financial intermediary provides indirect financing by issuing indirect securities (e.g., a bank deposit account).  Borrowers pay an interest rate as a cost of funds. 


Lenders consider the risk and return of their loans.  Financial intermediaries can be banks, insurance companies, pension funds, and other investment schemes (e.g., unit trusts and hedge funds).  They facilitate the flow of funds from savers to borrowers.  Financial market participants include brokers, dealers, fund managers, financial advisors, regulators, financial exchanges, rating agencies, and others. Run Time: 7:53

How the Federal Reserve works


This video overviews the Federal Reserve (Fed). The Fed creates money, regulates financial institutions, and influences our economy.  The Fed’s most important job is to preserve the value of dollar.  It also has twin mandates to keep inflation down and keep employment up.  The New York Fed buys and sells bonds from banks to control the money supply in the economy.  It can raise or lower interest rates to affect business activity. Lately, interest rates are near zero so there is not much for the Fed to do with interest rates. Run Time: 3:37

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Financial Sector Cybersecurity


This video contains discussion of cybersecurity in the financial sector.  Cyber security is a major problem nowadays in financial services.  Attacks require an entry point where someone clicks on a link on the internet or in their email.  Government intelligence and law enforcement agencies are working to stop cyber criminals in cooperation with the financial sector.  Public-private partnerships help to prevent cyberattacks.  Run Time: 5:41

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Can Big Banks Survive the Coronavirus Crisis?

In the 2008 financial crisis a bad bank was created by governments to absorb losses at that time.  However, banks have recovered since that time and are in good shape with enough capital before the Coronavirus crisis.  Run Time: 3:39

Source: Viacheslav Lopatin/Shutterstock.

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Fed Chairman On Covid-19 Impact

Citizens and businesses are under shut down or shelter-in-place orders across the nation.  The CARES Act offers $2.2 trillion of relief.  The Federal Reserve (Fed) has lowered interest rates to near zero for an extended period of time to assist recovery. Run Time: 29:29

Source: Viacheslav Lopatin/Shutterstock.