Complete the sentences from banks’ websites using the vocabulary of the unit.

1. If you need instant access to all your money, this is the ………. ………… for you.

2. Our products for ………….. ………… include business overdrafts, loan repayments that reflect your cash flow, and commercial mortgages.

3. Our local branch managers are encouraged to help local businesses and are authorized to ……….. …………. and overdrafts.

4. We offer standardized loans: you can be sure you won’t get less favourable terms and ………… than our other ……… …………...

5. We can provide you with a choice of ways in which to ……….. your ………. at our bank.

6. You can use your ………… ……….. from Tesco bank to purchase a new car or make some home improvements.

Match the two parts of the sentences. Translate the sentences into Russian.

1. Banks lend savers’ deposits	a) banks have to assess the risk involved.
2. They also create credit by	b) depends on the reserve requirements.
3. How much credit banks can create	c) depends on how risky it is for the bank to lend the money.
4. Before lending money,	d) so they can’t lend all their money in loans with long maturities.
5. The interest rate on a loan	e) lending the same original deposit several times.
6. Banks always need liquidity,	f) to people who need to borrow the money.

Find verbs in the text that can be used to make word combinations with the nouns below. Then use some of the verbs in the proper form to complete the sentences.

…………………	interest
…………………
…………………..	money
………………….
…………………..	risks
………………….

1. With standardized products, all customers are ………. the same interest rate.

2. Banks generally know from experience how much cash to keep in their reserves for customers who want to ………………. it.

3. Banks carefully study the financial situation of a company to ………….. the risk involved in lending it money.

Discuss the following.

· Look at some commercial bank websites from your country. Which banks offer the best rates for borrowers and lenders?

Central Banking

Read the text about central banking and answer the following questions.

· What are the main functions of central banks?

· How exactly does the central bank supervise the commercial banks?

· How do central banks influence exchange rates with foreign currencies?

A. The functions of central banks.

Most countries have a central bank that provides financial services to the government and to the banking system. If a group of countries have a common currency, for example the euro, they also share a central bank, such as the European Central Bank in Frankfurt.

Some central banks are responsible for monetary policy - trying to control the rate of inflation to maintain financial stability. This involves changing interest rates. The aim is to protect the value of the currency — what it will purchase at home and in other currencies.

In many countries, the central bank supervises and regulates the banking system and the whole financial sector. It also collects financial data and publishes statistics, and provides financial information for consumers. In most countries, the central bank prints and issues currency - putting banknotes into circulation. It also participates in clearing cheques and settling debts among commercial banks.

B. The central bank and the commercial banks.

Commercial banks have to keep reserves - a certain amount of their deposits - for customers who want to withdraw their money. These are held by the central bank, which can also change the reserve-asset ratio - the minimum percentage of its deposits a bank has to keep in its reserves.

If one bank goes bankrupt, it can quickly affect the stability of the whole financial system. And if depositors think a bank is unsafe they might all try to withdraw their money. If this happens it’s called a bank run or a run on the bank, and the bank will quickly use up its reserves. Central banks can act as lender of last resort, which means lending money to financial institutions in difficulty, to allow them to make payments. But central banks don’t always bail out or rescue banks in difficulty, because this could lead banks to take risks that are too big.

C. Central banks and exchange rates.

Central banks manage a country’s reserves of gold and foreign currencies. They can try to have an influence on the exchange rate - the price at which their currency can be converted into other currencies. They do this by intervening on the currency markets, and moving the rate up or down by buying or selling their currency. This changes the balance of supply - how much is being sold - and demand - how much is being bought.

Read the text again and match the English collocations on the left to their Russian equivalents on the right.

1) monetary policy	a) выручать, помогать
2) to maintain financial stability	b) обналичивать чеки
3) to protect the value of the currency	c) последний кредитор в критической ситуации
4) to supervise	d) коэффициент резервных активов
5)to regulate the banking system	e) пустить банкноты в обращение
6) to collect financial data	f) кредитно-денежная политика
7) to put banknotes into circulation	g) осуществлять интервенцию на валютных рынках
8) to clear cheques	h) собирать финансовую информацию
9) to keep reserves	i) защищать стоимость валюты
10) a reserve-asset ratio	j) спрос и предложение
11) a bank run	k) поддерживать финансовую стабильность
12) lender of last resort	l) обменный курс валюты
13) to bail out	m) регулировать банковскую систему
14) an exchange rate	n) держать запасы
15) supply and demand	o) «налет» на банк
16) to intervene on the currency markets	p) контролировать

2. Match the two parts of the sentences. Translate the sentences into Russian.

1. The central bank will sometimes lend money	a) if they could always be sure of rescue by the central bank.
2. Banks would probably start taking too many risks	b) if there is a run on a commercial bank.
3. Central banks arc usually responsible for	c) if monetary policy is successful.
4. The central bank can alter	d) printing and distributing banknotes.
5. There will be low and stable inflation	e) the amount of money commercial banks are able to lend.

3. Complete the text from the website of the Federal Reserve, the central bank of the United States.

Today the Federal Reserve's duties fall into four general areas:

- conducting the nation's (a) ………… policy;

- (b) ……………….. and regulating banking institutions and protecting the credit rights of consumers;

- maintaining the (c) ………….. of the financial system; and

- providing certain (d) ………..services to the US government, the public, financial institutions, and foreign official institutions.

Make word combinations using a word from each box. One word can be used twice. Then use the word combinations to complete the sentences below.

bank currency exchange financial monetary

markets run system policy rate stability

1. ………… ………, including setting interest rates, is designed to maintain …………. …………..

2. If there’s a …………. ……….. and the bank goes bankrupt, this can have a rapid effect on …………. …………..

3. On one day in 1992, the Bank of England lost over 1 billion pounds (more than half of the country’s foreign reserves) in the ………… …………., trying to protect the ……….. ………… of the pound.

Discuss the following.

· Is the central bank in Russia independent from the government?

· What powers and responsibilities does it have?

Venture Capital

Read the text about a venture capital company and answer the following questions.

· What is a start-up?

· What do venture capitalists specialise in?

A. Raising capital

Alex Rodriguez works for a venture capital company:

‘As you know, new businesses, called start-ups, are all private companies that aren’t allowed to sell stocks or shares to the general public. They have to find other ways of raising capital. Some very small companies are able to operate on money their founders - the people who start the company — have previously saved, but larger companies need to get capital from somewhere else. As everybody knows, banks are usually risk-averse. This means they are unwilling to lend to new companies where there’s a danger that they won’t get their money back. But there are firms like ours that specialize in finding venture capital: funds for new enterprises.

Some venture capital or risk capital companies use their own funds to lend money to companies, but most of them raise capital from other financial institutions. Some rich people, who banks call high net worth individuals, and who we call angels or

angel investors, also invest in start-ups. Although new companies present a high level of risk, they also have the potential for rapid growth - and consequently high profits - if the new business is successful. Because of this profit potential, institutions like pension funds and insurance companies are increasingly investing in new companies particularly hi-tech ones.^’

B. Return on capital

‘Venture capitalists like ourselves expect entrepreneurs - people with an idea to start a new company - to provide us with a business plan. Because of the high level of risk involved, investors in start-ups usually expect a higher than average rate of return - the amount of money the investment pays - on their capital. If they can’t get a quick return in cash, they can buy the new company’s shares. If the company is successful and later becomes a public company, which means it is listed on a stock exchange, the venture capitalists will be able to sell their shares then, at a profit. This will be their exit strategy.

Venture capitalists generally invest in the early stages of a new company. Some companies need further capital to expand before they join a stock exchange. This is often called mezzanine financing, and usually consists of convertible bonds - bonds that can later be converted to shares - or preference shares that receive a fixed dividend. Investors providing money at this stage have a lower risk of loss than earlier investors like us, but also less chance of making a big profit.’

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