Unit 10. The Financial System

Ex.1. Read the following words and word-combinations:

1. financial institution финансовый институт (организация)

2. stock exchange фондовая биржа

3. currency exchange валютная биржа

4. embrace охватывать, включать

5. budgeting составление бюджета

6. financial assets финансовые активы

7. flow (flew, flown) течь, перетекать

8. saver зд. вкладчик

9. funds средства

10. borrower заемщик

11. link связывать

12. intermediary посредник

13. futures фьючерс

14. bank lending банковские ссудные операции

15. option опцион

16. eurobond еврооблигация

Ex.2. Translate the following sentences into Russian paying attention to the Complex Subject.

1. Low demand is believed to be one of the main problems facing the country.

2. The loans are unlikely to be repaid.

3. The government is sure to start working out the details of its public spending cuts.

4. Turkey seems to be on the road to economic growth.

5. Little progress seemed to have been made in correcting the economic difficulties of Uruguay.

6. Export prices are estimated to have fallen.

7. A long-term (долгосрочный) contract for the supply of rise is reported to have been offered by Brazil.

8. Gross Domestic Product of Columbia is estimated to have risen by about 7%.

Ex.3. Translate into Russian paying attention to the Absolute Participle Construction.

1. The meeting being over, the participants left the hall.

2. Any economic system includes businesses, units of government and not-for-profit organizations, all of them having much in common.

3. Enterprises must be well-run, with the staff knowing their duties properly.

4. Managers must be competent, efficient and flexible, ability to handle people being the major skill.

5. Ability to talk to people and to persuade them is very important, loyalty towards the organization being even more important.

6. Written communication skills are very important, oral communication skills being equally important.

7. Businessmen are supposed to know how to hold talks and discuss business matters, business letter writing remaining an indispensable part of their work.

8. Businessmen settle matters through correspondence or telephone calls, personal meetings being the major communication tool.

9. Exports of the country have increased, oil being an important export item.

Ex.4. Read and translate the text.

The Financial System

The financial system of a developed country is a network of financial institutions comprising organizations carrying out and regulating financial activities, the ministry of finance, the treasury, the central bank, the tax service, stock and currency exchanges.

Financial activities embrace budgeting, financing, investment, banking, taxation and insurance. Financial assets flow in the system from savers, who act as sources of funds, to borrowers, who use them. Savers and borrowers in the system are linked by financial intermediaries - banks, finance, investment and insurance companies. Banks occupy a central place in any financial system.

Historically the heart of financial services industry in Britain has been located in the famous “Square Mile” in the City of London*. The City is one of the largest financial centres in the world.

There are more overseas banks in the City than in any other financial centre. The banking sector in Britain accounts for about a fifth of total international bank lending.

The world’s largest financial markets – the London Stock Exchange, the Foreign Exchange Market, the Financial Futures and Options Market, Eurobond and Eurocurrency markets, the world’s largest international insurance market – are also located there.

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*”Square Mile” in the City of London - «Квадратная миля» в Лондонском Сити

Ex.5. Find equivalents for the following word-combinations:

финансовая система развитой страны; сеть финансовых институтов (организаций); осуществлять и контролировать финансовую деятельность; министерство финансов; казначейство; налоговая служба; фондовые и валютные биржи; финансовая деятельность охватывает; финансовые активы; вкладчики; источники финансовых средств; заемщики; финансовые посредники; занимать центральное место; иностранные банки; составлять (часть чего-л.); банковские ссудные операции; рынок финансовых фьючерсов и опционов; рынок еврооблигаций; страховой рынок.

Ex.6. Give derivatives of:

financial adj taxation n investment n lending n

organization n saver n insurance n located adj

regulating adj borrower n service n

Ex.7. Answer the following questions:

1. What does a financial system comprise?

2. What do financial activities embrace?

3. Who are the savers and borrowers linked by?

4. What is the “Square Mile”?

5. What financial markets are located in London?

Ex.8. a) Read the text and translate it into Russian; b) Say what role banks play in any financial system.

Banks play a very important role in any financial system. Most typically banks open accounts for their clients and receive money on current and deposit accounts. These funds are used by them to provide loans or for investment. Apart from these functions bankers perform many other functions of great value to their clients. Banks collect cheques, discount bills of exchange, transfer money, buy and sell securities for their clients, take charge of their clients’ valuables.

As a rule, commercial banks in a country are supervised by the central bank, which acts as the government’s banker. Among other functions central banks have the sole right to issue banknotes and to license retail banks.

Words and word combinations:

1. deposit account депозитный счет

2. apart from не говоря уже о, кроме, не считая

3. banker банкир

4. perform a function осуществлять функцию

5. client клиент

6. collect cheques инкассировать чеки

7. discount bills учитывать векселя

8. transfer money переводить денежные средства

9. securities ценные бумаги

10. take charge of clients’ брать на хранение ценности клиентов

valuables

11. supervise контролировать, осуществлять надзор

12. have the sole right иметь монопольное право

13. issue banknotes выпускать денежные знаки

14. license лицензировать, выдавать лицензии

15. retail bank более мелкий банк

Ex.9. Match the infinitives in A with the nouns in B.

A B

to carry out and to regulate a place

to perform loans

to license activities

to occupy funds

to buy money

to borrow intermediaries

to issue a role

to use banknotes

to act as an account

to play bills

to open a function

to provide cheques

to collect currency

to discount banks

Ex.10. Say what you know about banks, what institutions comprise a financial system.

Ex.11. Read and translate the text.

The Stock Exchange

A stock exchange is a highly organized financial market where bonds, shares and other securities can be bought or sold.

Stock market business is worldwide. London, Johannesburg, New York, Melbourne, Tokyo, Calcutta, Paris, Amsterdam and Brussels are all famous centres of stock exchange activity.

The function of a stock exchange is to put those who wish to sell securities in touch with those who wish to buy them.

The London Stock Exchange plays a vital role in maintaining London’s position as a major financial centre. London has had a stock exchange for dealing in* different securities for over 200 years, its first building was constructed in 1801. Then, in 1853 a new building was constructed on the same site. But to keep pace with modern requirements and to provide the most up-to-date facilities for both members and investors it was decided once again to rebuild the Stock Exchange on the same site. Work started in 1966. The Stock Exchange was completed in 1972.

As a result of legal reforms implemented in 1986 and known as “Big Bang”, the Exchange has changed radically over recent years. The most fundamental change has been the move away from the traditional market floor to screen-based trading. Now stockbrokers deal in securities through telephones and computers which have linked London much more closely with the other major international financial centers.

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^*to deal in – торговать, BUT: to deal with – иметь дело с чем-либо

Vocabulary Notes:

share акция

vital role жизненно важная роль

maintain удерживать, поддерживать

deal in securities торговать ценными бумагами

keep pace with идти в ногу с

“Big Bang” «Биг Бэнг» («Большой взрыв» )

radically радикально

screen-based trading электронная торговля

stockbroker биржевой брокер

link связывать

dealing сделка

Ex.12. Find in text English equivalents for the following Russian words and phrases:

покупать и продавать облигации; акции и другие ценные бумаги; сводить вместе желающих продать и желающих купить ценные бумаги; играть жизненно важную роль; удерживать положение; идти в ногу с современными требованиями; обеспечить современными условиями для работы; было решено; осуществлять реформы; продавать и покупать ценные бумаги с помощью телефона и компьютера.

Ex.13. Write out the from text international words, transcribe and translate them into Russian.

Ex.14. a) Read the text and translate it into Russian; b )Say whether you agree with the assessment of the Russian stock market given in the text.

At present, the Russian stock market does not fully meet the Russian economy’s development requirements. The task of the market to accumulate savings and to transform them into investments in the real economy is not fulfilled effectively. Few securities are traded in the market. It is believed, however, that the market has a tremendous potential. If risks are lowered and a favorable investment climate is created in Russia, our market will become attractive to Russian and foreign investors.

Ex.15. Match the infinitives in A with the nouns in B.

A B

to meet a climate

to accumulate savings

to fulfil a task

to sell requirements

to implement construction

to play facilities

to deal in a house

to rebuild bonds

to provide reforms

to have securities

to complete a role

to create a potential

Ex.16. Read the interview with a foreign financier and sum up his assessment of the financial policy pursued by the government of his country.

* and made subsidies and allowances more targeted - сделали субсидии и пособия более адресными

Words and word combinations:

reconsider v пересматривать

huge adj огромный

budget deficit бюджетный дефицит

force v заставлять

grant autonomy предоставлять автономию (свободу действий)

have an impact повлиять на

quarterly adj ежеквартальный

strengthen v усиливать

issue bonds выпускать облигации

painful adj болезненный

Ex.17. Translate the text into Russian and analyze grammatical and lexical problems of the translation with your teacher.

The Central Banking System

A major sector of any modern monetary system is the central banking system, which is important to the functioning of the private economy and the fiscal operations of the national government. Central banking is an activity separate from ordinary commercial banking.

It is difficult to give a brief definition of a central bank that is both comprehensive and accurate. The nature of a central bank depends largely on its functions, which vary according to time and setting.

The most important characteristic of the modern central bank is its control over the monetary system. The central bank implements the government’s monetary policy by regulating the supply, cost, and availability of money and credit.

The central bank is also a country’s leading bank which acts as banker to the government and the banking system. Here the central bank receives, holds, transfers and disburses funds of the central government. Furthermore, the central bank provides services related to the public debt.

The central bank acts as the government’s broker in its borrowing and lending operations, it issues and deals in government securities.

Services to the banking system include, for example, the clearing and collecting of checks and distribution of coins and paper currency.

The US Treasury

The US Treasury was created by Congress in 1789. Since that time it has been one of the major financial organizations in the US. At present the Treasury performs the following functions.

1. As the economic adviser to the President the treasury has the responsibility for formulating internal and external financial policy, including recommendations on taxation. The Treasury possesses some authority that affects the working of the monetary system. Varied monetary influences are inherent in Treasury actions related to its management of the existing public debt.

2. In its role as a financial agent, the Treasury issues coins and banknotes, checks, saving bonds, and other securities. Treasury borrowing through the issuance of new government securities is the major method for financing a budget deficit.

3. A significant aspect of the work of the Treasury is law enforcement (реализация законодательства, применение закона) related to federal taxes and the customs as well as collection of taxes and import duties.

4. A distinguishing feature of the US Treasury is its responsibility for conducting investigation and punishment of fraudsters, smugglers, and counterfeiters.

5. Since the establishment of the Treasury its functions have been expanding as well as growing in complexity. In addition to its traditional activity the Treasury ensures the personal security of the President, exercises control over the sale of firearms, and arranges the training of personnel for law enforcement.

Role – play: The Financial System Offers Interesting Careers

Discuss with a partner where you’d like to work and in what capacity. Justify your choice. Use information from the Unit.