The financial system
– the fundamental organisation of financial intermediation, distinguishing between a direct and an indirect intermediation circuit;
– the concept of a financial balance, distinguishing between persons who accumulate financial assets, persons who go into debt and persons who are intermediaries between the two categories;
– the role of information in financial decisions;
– the fundamental reasons for household savings, as well as the criteria on the basis of which households build their portfolios of financial assets;
– the criteria that orient the decisions of businesses in relation to the mix of the sources of their financing;
– the reasons for the existence of financial intermediaries;
– the time value of money, microeconomic and macroeconomic aggregates that determine the transfer of resources through the financial system;
– the notions at the basis of the formation of interest rates, what is intended for the structure of interest rates by maturity and the relationship between interest rates and risk;
– the importance of the system of payments in modern economies and the process of the bank's "creation" of money: from the monetary base input by the central bank to the growth of deposits through the multiplier mechanism, with particular reference to the relationship between the multiplier and behaviour of banks and the public.
Financial institutions
– understanding the peculiar aspects of the role played by banks within the financial system and namely, what distinguishes banks from other categories of financial intermediaries;
– being familiar with the principal categories of non-bank financial intermediaries;
– being familiar with the parties who operate in the secondary market: brokers and dealers;
– being familiar with the essential characteristics of mutual investment funds and other collective investment entities;
– understanding the importance of pension funds in modern financial systems;
– being familiar with the essential characteristics of insurance companies in their role as financial intermediaries.
Bank transactions
– identifying, through a classification of banking contracts, the three large areas of bank operations, namely, the gathering of funds, the use of funds in lending and the supply of payment and funds management services;
– understanding the placement of transactions within a bank's financial statements and the contribution made by the transactions to the bank's earnings;
– being familiar with wholesale transactions, distinguishing those placed into effect by the bank as a counterparty to: the central bank, other banks, or institutional investors;
– being familiar with the salient characteristics of surveys carried out by banks for evaluating the extent of creditworthiness of their customers;
– being familiar with the technical aspects of financing transactions, as distinguished in relation to the purposes of the transactions and the maturity of the transactions;
– being familiar with the broad array of services offered to customers, distinguishing between payment services, custody services and funds management services, and identifying the principal cost elements thereof;
– understanding how funds management services may represent for customers instruments for investing the customers' available funds as an alternative to time deposits;