• Unit 5: The Eurodollar System

    This unit attempts to explain the complexity of today's monetary system. It begins with an overview of the Eurodollar, covers the financial crisis of 2007–2009, and details the onshore dollar and offshore dollar monetary hierarchies. It details the change in gold as the world's monetary first layer and the transition to an onshore/offshore dollar world. It discusses the last several decades of monetary instruments, including Treasury repo and money market funds (MMFs). The financial crisis of 2007–2009 is covered in detail, which led to a shift in the dollar system. The liquidity crises of 2019 and 2020 are also discussed.

    Completing this unit should take you approximately 2 hours.

    • 5.1: Offshore Dollars

      This subunit begins with the significance of the Bretton Woods agreement and how the dollar became the undisputed world reserve currency. It explains the origins of the Eurodollar system. The transition to the dollar as the world reserve currency carried implications throughout the world and was a product of monetary evolution. The Eurodollar's creation during the 1950s has implications important to understanding today's monetary system. It discusses Triffin's Paradox and how the dollar was unlinked from gold in the 1970s. This subunit highlights the beginning of free-floating currencies without the restriction of gold as first-layer money.

    • 5.2: Money Market Funds

      This subunit introduces modern money markets, dealer banks, and Treasury repo through a layered money framework. It explains the importance of reference rates, which ties together the Eurodollar and the onshore US dollar systems. It also covers money market funds (MMFs).

    • 5.3: Financial Crises

      This subunit examines the past two decades of the dollar-denominated monetary system. From the Long Term Capital Management crisis in 1998 to the 2007–2009 financial crisis to the pandemic's liquidity crisis, the dollar system has faced challenges. It examines the Federal Reserve's responses to each crisis and discusses its position in today's monetary hierarchy. It also discusses the nature of today's financial and monetary system.

      • 5.4 Supplemental Information

    • Unit 5 Review and Assessment

      • Receive a grade