Digital Money and Banking

Module overview

This module provides an introduction to the theory and practice of modern banking, with a particular emphasis on how digital technologies are transforming money, financial intermediation, and the structure of the banking sector. It begins with a foundation in the economics of money and banking, outlining the essential functions of financial intermediaries, traditional bank business models, and the role of banks in credit allocation and investment activities. Students will examine how banks create liquidity and money, and how these functions underpin financial stability and economic growth. A central theme of the module is the rapid evolution of digital money and digital banking. Students will study the development of digital payment systems, fintech innovations, and the transformation of traditional banking through technology-driven business models. The course provides an in-depth analysis of central bank digital currencies (CBDCs), their design choices, policy implications, and potential impact on the monetary system. It also explores decentralised finance (DeFi), blockchain-based financial infrastructures, and how these innovations challenge established banking intermediaries. Building on this foundation, the module explores the key risks faced by banks—credit, market, liquidity, solvency, operational, and systemic risks—and the regulatory frameworks designed to enhance bank soundness and safeguard the financial system. Issues of bank stability, prudential regulation, and crisis prevention are considered in both theoretical and applied contexts. The module concludes by examining the broader landscape of financial innovation and the future of banking, focusing on how digital technologies, new forms of money, and data-driven financial services are reshaping competition, regulation, and the architecture of the financial system. Throughout, the course integrates traditional banking concepts with modern digital-finance developments to equip students with a comprehensive and forward-looking understanding of digital money and banking.

Aims and Objectives

Learning Outcomes

Knowledge and Understanding

Having successfully completed this module, you will be able to demonstrate knowledge and understanding of:

the risks, stability and performance of banks in both traditional and digital banking environments;
the institutional structure and uses of financial markets with emphasis on banking and digital financial services;
the role of banks in credit, liquidity, and money creation and how these roles evolve with digital money;
the functions of banking in financial markets and the economy, including the impact of digital technologies on these functions;
the role of regulations in banking and the influence of the central bank including regulatory responses to digital financial innovation and central bank digital currencies.

Subject Specific Intellectual and Research Skills

Having successfully completed this module you will be able to:

understand the key role banks play in the markets of other financial instruments and in emerging digital-finance ecosystems;
assess the role and impact of banks and the central bank, and the need for appropriate regulation and supervision in the context of digital money, CBDCs, and decentralised finance.

Transferable and Generic Skills

Having successfully completed this module you will be able to:

learn to evaluate data, and use it in order to act upon it.
develop skills in critically assessing and using official statements.
develop analytical skills using an evidence-based approach.

Learning and Teaching

Teaching and learning methods

Teaching mainly takes the form of lectures, with recommended essential and supplementary reading. Depending on class size, there is the possibility of adding group presentations based on case studies. The course should offer ample stimuli for MSc dissertation topics.

Study time
Type	Hours
Teaching	24
Independent Study	126
Total study time	150

Resources & Reading list

General Resources

Journal of Financial Services Research. Journal

Bank of England Quarterly Bulletin. Journal / Working paper series

Financial Times.

Journal of Banking and Finance. Journal

Journal of Financial Intermediation. Journal

Textbooks

Lloyd (2023). Central bank digital currencies: the future of money. Columbia University Press.

Matthews and Thompson (2014). The Economics of Banking. Wiley.

Berger, Molyneux, and Wilson (2025). The Oxford Handbook of Banking. Oxford University Press.

Casu, Girardone and Molyneux (2022). Introduction to Banking. Pearson.

Saunders and Cornett (2024). Financial Markets and Institutions. McGraw Hill.

Hubbard and O’Brien (2018). Money, Banking and the Financial System. Pearson.

Mishkin and Eakins (2015). Financial Markets and Institutions. Pearson.

Assessment

Formative

This is how we’ll give you feedback as you are learning. It is not a formal test or exam.

Case study

Assessment Type: Formative
Feedback:
Final Assessment: No
Group Work: No

Summative

This is how we’ll formally assess what you have learned in this module.

Breakdown
Method	Percentage contribution
Examination	100%

Referral

This is how we’ll assess you if you don’t meet the criteria to pass this module.

Breakdown
Method	Percentage contribution
Examination	100%

Repeat

An internal repeat is where you take all of your modules again, including any you passed. An external repeat is where you only re-take the modules you failed.

Breakdown
Method	Percentage contribution
Examination	100%