Summarize the contents of the Text using these questions as an outline.

1. What are banks concerned with?

2. Why do banks cooperate with government?

3. In what form do banks receive money?

4. How does a bank make its main profit?

5. What is the primary function of a bank today?

6. How do you understand

the term liquidity of money?

BANKING SYSTEM

There are several types of banks in the world, and each has a specific role and function – as well as a domain – in which they operate. In broad strokes, banks may be divided into several groups on the basis of their activities and these include investment banks, retail, private, business, and also corporate banks. Many of the larger banks have multiple divisions covering some or all of these categories.

Retail banks deal directly with consumers and small business owners. They focus on mass market products such as current and savings accounts, mortgages and other loans, and credit cards. By contrast, private banks normally provide wealth management services to high net worth families and individuals.

Business banks provide services to businesses and other organizations that are medium sized, whereas the clients of corporate banks are usually major business entities.

Lastly, investment banks provide services related to financial markets, such as mergers and acquisitions.

Another way in which banks may be categorised is on the basis of their ownership. They might either be privately held or publicly owned banks.

Privately owned banks are motivated by profit in their business operations. Publicly owned banks are held by the state governments of the individual countries and they serve as a nation’s centralized bank, as well as an economic backbone for that particular country. They are also known as central banks.

A central bank, reserve bank or monetary authority, is an entity responsible for the monetary policy of its country or of its group of member states, such as the European Union. Its primary responsibility is to maintain the stability of the national currency and money supply.

In most countries the central bank is state-owned and has a minimal degree of autonomy, which allows for the possibility of government intervening in monetary policy. Central Banks are also vested with certain supervisory powers so that banks and various other financial institutions do not behave irresponsibly. The functions of central banks widely vary from one country to another. Some of the important functions of the central bank of a country are as follows:

• Issuance of bank notes

• Managing the country's foreign exchange and gold reserves

• Deciding on the official interest rate to manage inflation

• Acting as the banker to the Government and the banker's bank

• Regulation and supervision of the banking industry

In most countries the central banks are state-owned and their policies, therefore, are subject to government interference. On the other hand, 'independent central banks' are the ones that function with least government intervention.

Publicly owned banks, which are controlled by the government, have numerous responsibilities pertaining to the banking sector of the country, such as administering various activities for the commercial banks of that country. They also determine the rates of interest offered by banks doing business in that country, as well as playing a major role in maintaining liquidity in the banking sector.

There are several types of notable retail banks. These include the offshore, community and savings banks, as well as the community development banks, building societies, postal savings banks, ethical banks and Islamic banks.

Offshore banks operate in areas of reduced taxes, as compared to the country in which the investor lives in. This is why most offshore banks are private banks.

Community banks are monetary organizations operated on a local basis, while community development banks cater to the populations, or markets, that have typically not been served properly.

Postal savings banks are basically savings banks that operate in conjunction with the national postal systems of that country.

Building societies where traditionally

mutually owned by their customers. They provide a full range of retail banking services, but with a particular focus on mortgages.

Ethical banks do their business based on their own code of conduct. They only accept investments that they perceive to be useful from a social and environmental point of view. The Islamic Banks perform their business operations as per the Sharia law, the Islamic code of law. In particular, this means that they operate sans interest.

There are two types of investment banks – the investment banks that perform underwriting activities, and the merchant banks, a traditional form of banking, that performs trade-financing activities.

Commercial banks offer a wide range of corporate financial services that ad-dress the specific needs of private enterprise. They provide deposit, loan and trading facilities but will not service investment activities in financial markets.

Commercial banks can be described as a type of financial intermediary.

Commercial banks play a number of roles in the financial stability and cash flow of a countries private sector. They process payments through a variety of means including telegraphic transfer, internet banking and electronic funds transfers. Commercial banks issue bank checks and drafts, as well as accept money on term deposits.

Other institutions that perform banking services include savings and loan associations, credit unions, mortgage companies, insurance companies,etc..

Credit unions are groups of people, typically workers at a particular business, that pool their money together for savings and loan activity. Credit unions typically offer lower loan interest rates to members.

Savings and loan associations traditionally accepted deposits from private investors and then lent money to individuals for mortgages.

A mortgage is a loan or money borrowed to pay for a home, business or other types of real estate. The home or business is the security for the loan to buy the home or business. If the borrower fails to repay the loan, the bank or savings and loan assumes ownership of the home or business.

Bankruptcy or going bankrupt means that a person is so in debt that they cannot repay their loans. When they declare bankruptcy, they publicly declare that they cannot repay their debts. A plan is worked out so that the person who owes money works out a plan to repay at least some of the debts owed.

VOCABULARY

Central Bank – центральный банк

Trustee Savings Bank – доверитель-ный сберегательный банк

clearing bank – клиринговый банк

commercial bank – коммерческий банк

a financial intermediary – финансо-вый посредник

to deposit (with) – хранить, вклады-вать

depositor – вкладчик

a deposit – вклад, депозит

to issue deposits – открывать вклады

to run down a deposit – уменьшать вклад

sight deposit – депозит до востребования, бессрочный вклад

time deposit – срочный вклад

to withdraw – отзывать (вклад)

to credit – кредитовать

to debit – дебетовать

to lend – давать взаймы

lending – кредитование

to borrow – брать взаймы

to transfer – переводить, передавать

to fail, to go bankrupt, to go bust – обанкротиться

interest rate – процентная ставка

bank accounts – банковский счет

a cheque accounts – текущий (чеко-вый) счет

to write (to draw, to issue, to make out) a cheque – выписать чек

loan – ссуда, заем

a bank loan – банковская ссуда, заем

market loans – рыночные займы

a transaction – сделка

assets – активы

interest-earning assets – активы, приносящие процентный доход

cash assets – денежные активы

liquid (illiquid) assets – ликвидные активы

liabilities – пассивы

reserves – резервы

reserve ratio – резервная норма

securities – ценные бумаги

government bonds – государствен-ные облигации

shares – акции

bill – вексель

advances – ссуда в виде аванса

certificates of deposit – депозитные сертификаты

the stock exchange – фондовая бир-жа

retail banking – операции банков с широкой клиентурой

wholesale banking – операции

банков с крупными промышленными предприятиями

banking business – банковское дело; банковские операции

banking services – банковские операции syn. bank services

banking facilities – банковские услуги (операции)

deposit banking – депозитные операции банков

banking institution – учреждение банковского типа

syn. financial institution – кредитно-финансовое учреждение

depository (thrift, savings) institution – депозитное учреждение

lending institution – кредитное учреждение

full service – полный комплекс об-служивания

service fee – вознаграждение за услу-ги

large (small) scale services – услуги, предоставляемые банком крупным фирмам (мелким фирмам и населе-нию)

personal services – услуги частным лицам

commercial services – услуги фирмам

trust services – трастовые услуги, доверительные услуги

cash management services – услуги по контролю и регулированию денежных операций (в банке, фирме)

investment services – услуги по управ-лению инвестициями

agency services – посреднические (агентские) услуги

insurance services – страховые услу-ги

real estate services – услуги по управ-лению недвижимостью по доверен-ности

trust deed – доверенность на управ-ление собственностью

trust operations – доверительные услуги (операции), трастовые услуги (операции)

estate syn. assets – имущество, акти-вы

trust estate – имущество, управляе-мое по доверенности

realty company – компания, занима-ющаяся операциями с недвижимым имуществом

real estate – недвижимое имущество

mortgage loan – ссуда под недвижимость

real estate mortgage – закладная под недвижимость

to borrow on mortgage – получать ссуду под залог недвижимого иму-щества

to mortgage property – закладывать имущество

to issue a letter of credit – открыть аккредитив

syn. to open a letter of credit

terms of a letter of credit – условия аккредитива

to pay off smb – рассчитаться с кем-либо

to pay off bonds – погасить облига-ции

9. Give English equivalents to the following:

Центральный банк, международный банк, учетная ставка, государственный банк, резервные требования, операции на открытом рынке, долгосрочное финансирование, краткосрочное финансирование, обязательный резерв, проценты, процентная ставка, банковская ссуда, денежная наличность, кассовый резерв, страховая компания, доверительный сберегательный банк, открыть депозит, срочный вклад, бессрочный вклад, эмиссионный банк, брокерские операции с недвижимостью, трастовое управление, депозит до востребования, операции банков с крупными промышленными предприятиями.

10. Read and translate the definitions of the basic banking terms:

1. Central bank — a bank for banks. America’s central bank is the Federal Re-serve System.

2. National banks — commercial banks that are chartered by the federal govern-ment.

3. State banks — commercial banks that are chartered by state governments.

4. Discount rate — the interest rate charged to banks for borrowing from the Federal Reserve System.

5. Reserve requirements — the portion of demand deposits that banks must keep as cash in the vault or as deposits with a Federal reserve bank.

6. Open market operations — the purchase and sales of the U. S. government securities by the Federal Reserve banks intended to change the economy’s supply and demand.

7. The required reserve (legal reserve) — the specified minimum percentage of its deposit liabilities which member bank must keep on deposit at the Federal Re-serve bank in its district or in vault cash.

8. The required reserve ratio — the proportion of deposits that a depository institution must hold in the form of reserves.

9. Excess reserves — the amount by which a member bank’s actual reserve ex-ceeds its required reserve; actual reserve minus required reserve.

10. Credit — immediate purchasing power that is exchanged for a promise to repay it, with or without interest, at a later date.

11. Creditor — a person or organization to whom money is owed.

12. Interest — payment for

using someone else’s money (from the debtor’s perspectives); income derived from allowing someone else to use one’s capital (from the creditor’s perspective).

13. Interest rate (interest) — the price of borrowing money or the price received for lending money, expressed as a percentage.

14. Simple interest — a fixed rate on a stated sum; the same amount is paid or accumulated each year irrespective of the amount borrowed.

15. Compound interest — the interest that is calculated each year on capital plus interest already accumulated.

16. Bank loan — a fixed amount lent by a bank to a customer for an agreed time and on specified terms.

17. Short-term financing — money that will be used for a period of one year or less and then repaid.

18. Long-term financing — money that will be used for longer than one year.

19. Vault cash — the currency a bank has in its safes (vault) and cash drawers.

11. Choose the necessary word and put it in the sentence:

competition, services, raise, a price, payments, large-scale, retail,

smaller-scale

1. New... are constantly being introduced and developed by commercial banks.

2. Development banks exist to increase the economic growth of a country and... the living standard of population.

3. The aim of commercial banks is to provide and develop services that can be sold at... that will yield a profit.

4. Many banks offer a combination of wholesale and... banking.

5. The wholesale banking provides...... services to companies and other banks.

6. The retail banking provides...... services to the general public.

7. Deposits... and credits are the basis of the services offered by banks.

8. The increased... between the banks contributes to the development of international business.

12. Translate into English:

1. Различают два вида государственных банков: центральные банки и государственные коммерческие банки.

2. По страновой принадлежности банки делятся на отечественные, иностран-ные и совместные.

3. По степени независимости можно выделить самостоятельные и дочерние банки.

4. В зависимости от масштабов деятельности – крупные, средние и мелкие банки. Показателем для определения масштабов деятельности банка является его уставный капитал.

5. По характеру экономической деятельности — эмиссионные, коммерче-ские, специализированные банковские учреждения.

6. По срокам выдаваемых кредитов — банки краткосрочного и долгосроч-ного кредита.

• Банки долгосрочного кредитования выдают кредиты на срок свыше 5 лет.

• Банки краткосрочного кредита выдают кредиты на срок до 3 лет.

8. По хозяйственному признаку (в зависимости от отрасли, которую банки обслуживают в первую очередь):

• промышленные банки (обслуживают промышленность),

• торговые банки (обслуживают торговлю),

• сельскохозяйственные банки (обслуживают сельское хозяйство).

9. B действительности в чистых формах перечисленные виды банков не существуют, каждый банк характеризуется своими отличительными чертами.

10. Центральные банки многих стран являются государственными, их капитал принадлежит государству, что позволяет осуществлять свою политику и операции в соответствии с требованиями экономики, а не с целью получения прибыли.

11. Центральный банк выполняет функции главного регулирующего органа платежной системы страны.

12. Эмиссионный банк — это банк, осуществляющий выпуск денежных знаков, банкнот, являющийся центром и регулятором банковской системы. В настоящее время в роли эмиссионного банка выступает центральный банк страны.

13. Коммерческие банки осуществляют кредитно-расчетное обслуживание промышленных, торговых и других предприятий и организаций, а также населения.

14. Специализированные банковские учреждения (ипотечные, инвестиционные, сберегательные, отраслевые и прочие банки) могут заниматься кредитованием какого-либо определенного вида деятельности, например внешнеэкономической.

13. Answer some questions:

1. What does a bank organization and operation depend on?

2. What types

of banks do you know?

3. Do central banks provide a country with a number of services?

4. What is the aim of development banks?

5. What is the aim of commercial banks?

6. What does the full-service philosophy of many banks mean?

7. How can you explain the difference between wholesale and retail banking?

8. What three essential functions have both types of banking?

9. Why are these functions very important for bank operation?

10. What factors make banking an international business?

11. How have the major banks of the world established extensive international operations?

WORLD BANK

Large banks today are truly transnational enterprises. International banks, like domestic banks, act as financial intermediaries. But they operate in different legal environment. The laws regulating domestic banking in each nation are typically very restrictive, yet many nations allow international banking to operate largely unregulated. Because they are not hampered by regulations, international banks typically can offer depositors and borrowers better terms than could be negotiated at a domestic bank.

The World Bank is the world’s foremost intergovernmental organization concerned with the external financing of the economic growth of developing countries. The official title of the institution is the International Bank for Reconstruction and Development (IBRD).

The World Bank's activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development).

The World Bank often relies on the IMF to encourage countries to make difficult economic reforms.

Voting power in the Bank (as well as in the IMF) is determined by the size of each member nation’s subscription. Ultimate power, through weighted voting, rests with the Board of Governors of the Bank. The governors meet annually in September. The day-to-day affairs of the Bank are determined by executive directors who live permanently in Washington, D.C. They hire a president, who, in turn, hires a staff.

The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and poverty reduction, and for encouraging and safeguarding international investment. The group and its affiliates have their headquarters in Washington, D.C., with local offices in 124 member countries.

The World Bank Group consists of

• the International Bank for Reconstruction and Development (IBRD), established in 1945,

• the International Finance Corporation (IFC), established in 1956,

• the International Development Association (IDA), established in 1960,

• the Multilateral Investment Guarantee Agency (MIGA), established in 1988 and

• the International Centre for Settlement of Investment Disputes (ICSID), established in 1966.

The World Bank Group has had a significant positive effect on the flow of capital to the poorer countries of the world, both directly and indirectly, and knowledge of Third World problems has increased enormously.

15. Give English equivalents to the following:

Предоставления долгосрочных займов и кредитов, ресурсы банка, акционерный капитал, размещение облигационных займов, управлять денежными ресурсами, работать с правительственными облигациями, специализироваться на кредитовании производства, предоставлять консультативные услуги при разработке программ развития с целевыми инвестициями, структурная перестройка и

модернизация предприятий.

16. Read the words and guess their meanings:

financial intermediaries, domestic banking, international banking, to offer depositors and borrowers better terms, foremost intergovernmental organization, developing countries, reasonably satisfied, the prospects for repayment, short-term financing, long-term financing, agriculture and rural development, environmental protection, to provide loans at preferential rates, additional votes which depend on financial contributions to the organization, the living standards of people in the developing world.

17. Are the following statements true or false?

1. The World Bank's activities are focused on developing countries.

2. The World Bank Group and its affiliates have their headquarters in Bretton Woods, New Hampshire.

3. The World Bank came into formal existence on 27 December 1944 following international ratification of the Bretton Woods agreements.

4. The World Bank Group consists of 6 organizations.

5. The World Bank is the world’s foremost intergovernmental organization con-cerned with the external financing of the economic growth of developing coun-tries.

6. The official title of the World Bank is International Monetary and Financial Committee.

7. Voting power in the World Bank is determined by the size of each member na-tion’s subscription.

8. By tradition, the president of the World Bank is an American.

9. The Board of Directors consists of 22 members.

10. Because of the size of their subscription five nations (the United States, Japan, Germany, the United Kingdom and France) are entitled to appoint executive directors.

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