Course overview
This course examines international finance and international banking. Students first build the foreign exchange toolkit: the structure of the FX market, exchange-rate parity relationships and forecasting, currency futures, options and swaps, and the measurement and management of a firm’s exposure to exchange-rate risk. The course then examines international banking: the structure, business models and cross-border operations of global banks; the instruments banks use to finance international trade; the Eurocurrency and Eurobond markets through which international banks fund and lend; and sovereign risk, international banking crises and emerging developments in cross-border banking. Emphasis is placed on critical analysis and problem solving, preparing students to price, hedge and appraise in international financial markets and to understand the banks at the centre of them.
- FX Markets and Derivatives
- Exposure to Exchange-Rate Risk
- International Banking
Course learning outcomes
- Analyse the foreign exchange market and international parity relationships, and apply currency derivatives: forwards, futures, options, and swaps, to price and structure currency hedges.
- Measure a firm's transaction, economic, and translation exposure to exchange-rate risk, and design, evaluate, and communicate a hedging strategy appropriate to the exposure and the firm's risk preference.
- Appraise the structure, business models and cross-border operations of global banks — why and how banks internationalise — comparing the internationalisation of US, European, Japanese, Chinese and emerging-market banks and the business models of global banks.
- Structure and price the instruments banks use to finance international trade — letters of credit and documentary collections, bills of exchange and their discounting, factoring, forfaiting and export credit — and evaluate the risks and compliance requirements (AML and sanctions) of cross-border trade finance.
- Appraise international banks’ offshore funding and debt markets — the Eurocurrency and Eurobond markets — together with the international banking regulatory architecture (high-level), sovereign and country risk, international banking and financial crises, and emerging cross-border banking developments (crypto, CBDC, sanctions).