Assignment Question

Describe the main characteristics of the foreign exchange market. What are the parities that explain how the value of a currency is determined? Are these parity conditions an accurate description of the reality? More specifically, can any support for them be found in the empirical literature? In relation to the issuance and control of currency units, what are the differences between traditional currencies (such as British pound or Euro) and virtual currencies (such as Bitcoin)?

Further Guidance Please note that the assignment question consists of three parts and you are expected to address all of them. You will need to consult academic literature in order to answer this question competently. A good starting point for your reading and fact-finding when preparing your assignment are the following:

  • Bank for International Settlements (2016). Triennial Central Bank Survey of Foreign Exchange and OTC Derivative Markets in 2016. Downloadable at: http://www.bis.org/publ/rpfx16.htm Böhme, R., Christin, N., Edelman, B. and Moore, T., (2015). Bitcoin: Economics, Technology, and Governance. Journal of Economic Perspectives, 29(2), pp.213-238.
  • Polasik, M., Piotrowska, A.I., Wisniewski, T.P., Kotkowski, R. and Lightfoot, G., (2015). Price Fluctuations and the Use of Bitcoin: An Empirical Inquiry. International Journal of Electronic Commerce, 20(1), pp.9-49.
  • Taylor, A.M. and Taylor, M.P., (2004). The Purchasing Power Parity Debate. Journal of Economic Perspectives, 18(4), pp.135-158.
  • Valdez, S. (2007). An Introduction to Global Financial Markets. 5th Edition. Basingstoke: Palgrave Macmillan.

In addition to the guidance in the Programme Handbook, the following points may also help you produce a good piece of work:

  • You must address the question asked. ‘Not answering the question’ will result in a significant loss of marks.
  • Your essay must be properly referenced: – only sources cited in the text of your answer should be included in the bibliography; – all sources (including those for any numeric examples used) should be acknowledged; – there should be no references in your answer to sources which are not in your bibliography BUT if you have not consulted the reference directly yourself you should indicate in the text of your answer the secondary source from which it comes. It is this secondary source which should be in your bibliography.
  • While infrequent selective quoting within quotation marks is acceptable, listing a reference in the bibliography does not make it acceptable to copy large sections of a book or article into your answer. You must aim to summarise more extensive points in your own words.
  • Plagiarism is regarded as a most serious instance of academic misconduct and is dealt with accordingly.
  • Being asked to discuss something is not the same as being asked to list things. A discussion will consider alternative points of view and your own thinking and evaluation of these points should be central in the discussion of the topic.
  • It is expected that you will consult academic journals as well as professional journals, textbooks, and other sources.
  • At the same time, indiscriminate referencing is no guarantee of a good assignment. Part of the assessment is to see how able you are to identify and use selectively the most relevant and reliable sources.
  • When citing articles and books, please follow the Harvard referencing style.

In addition to the above, the following points will also contribute to a better-quality assignment: Page 3 of 3

  • Evidence of a good understanding of key concepts and ideas
  • An argument development that hangs together as a whole
  • Inclusion of examples/illustrations where relevant
  • Substantiated conclusions
  • Last but not least, some creativity and originality!

The assignment should be fully referenced throughout and contain a bibliography.

Word limit: 3,500 (+/- 10% excluding references)