Match each word with its correct definition.
1. account a. price paid for the use of money
2. to borrow b. to fail to pay money when it is due
3. circulation c. money owed
4. creditor d. price paid for the money
5. monetary e. taking smth for a certain time with the
intention of giving it back
6. to default f. to give out for use, t put into circulation
7. to issue g. money left with an institution, e.g. a bank
8. interest h. person or organization to whom money
is owed
9. loan i. movement from place to place
10. debt j. money given for a limited period of time
and which ill be paid
Translate the following sentences into English in writing.
1. В 1716 г. в Париже Джон Ло создал новый вид банка.
2. В нём надёжность вклада гарантировалась чаще землёй, чем серебром или золотом.
3. Парижане покупали ценные бумаги Джона Ло, не зная, что их обеспечение гарантировалось несуществующим металлом в несуществующих шахтах американского континента.
4. ценные бумаги выпускались в огромном количестве.
5. Вскоре к ним стало возникать недоверие, и их стали возвращать в банк.
6. Банк был не в состоянии оплатить золотом все возвращаемые ему ценные бумаги.
7. Очень скоро их оплата золотом и серебром была приостановлена
Scan TEXT 1 (III) for the information that will help you to answer
The following questions. For better understanding
Consult the list of terms and expressions below the text.
1. What was the difference between the Banque Royale and the Bank of
England?
2. How was the Bank of England formed?
3. What changes in monetary system were introduced by the Bank of
England?
4. What is the role of the Bank of England now?
5. What does "the rate of interest" mean?
Banks and Money (III)
In1694, the Bank of England was formed; its founders subscribed the money the King needed. In return, they were given the right to make loans to others with newly issued notes backed by the King's promise to pay. The Bank became an accomplished instrument for regulating the creation of money by lesser banks - in placing limits on lending and consequent deposit expansion and note issue, in doing so, it provided the restraint that, in its absence, had brought misfortune' in Amsterdam, disaster in Paris. Fn London in the eighteenth century the goldsmiths made loans in notes against the holdings of gold and silver coin. The Bank of England, when it receivedthese notes, returned them for collection in gold and silver. This required the banks to maintain reasonable reserves of cash against their note issues. They could not be reckless in the issue of notes as was Law. Later the Bank acquired for itself a monopoly of note issue, first in London, then throughout the country.
The subordinate or commercial banks could still lend the funds of the depositors. This would mean deposits - money - for those who borrowed. And this money-creation could be carried to excess. The Bank of England developed a method for preventing this. When the ordinary or common banks seemed too generous with their loans, the Hank allowed some of their loans to run out2 or it sold some of the securities it held. In repaying these loans or paying for their securities, customers of the commercial banks would transfer gold and silver from the vaults of the ordinary banks to the Bank of England. The reserves in gold and silver of the commercial banks, the protection in case depositors came for their money, would thus be depleted. Their lending and associated deposit - and money-creation would then have to be curtailed. This is the procedure now celebrated as open market operations3. The commercial banks could replace their depleted reserves by borrowing from the Bank of England. Bui that could be restrained by raising the rate of interest. This charge by the Bank of England came to be called the Bank Rate, in the last century a mysterious and wonderful thing. In the United Slates the Bank Rate is the rediscount rate or, nowadays, the discount rate. Such were the regulatory functions as developed by the Bank of England.
The Bank of England, we have seen, disciplined its subordinate banks by presenting their notes systematically for collection in silver or gold. Thus it required them to keep their loans and resulting deposits in some reasonable safe relationship to their hard cash. This would be the basic function of an American central, bank.
Source: adapted from “The Age of Uncertainty”
by Galbright J.K.
Notes:
1. ...it provided the restraint that, in its absence, had brought
misfortune... - это обеспечивало ограничение денежной
массы, ибо отсутствие такового привело бы к финансовому
бедствию…
2. ... the Bank allowed some of their loans to run out -
банк допускал сокращение их займов...
3. This is the procedure now celebrated as open market operations. – Эта процедура сейчас называется операциями на открытом рынке.
Words and Expressions
to subscribe money - вносить долю
to make a loan to smb - давать заём, ссуду кому-либо
to place limits on expansion - ограничить расширение
goldsmith - ювелир
holding - запас; пакет акций, владение
(напр., акциями); pl вклады;
авуары
to make loans in notes against - давать взаймы в банкнотах,
holdings of gold coins - обеспеченных золотыми
монетами
to return banknotes for collection - обменивать ценные бумаги на
in gold золото
reckless - безответственный, безрассудный
subordinate bank - подчинённый банк
to be too generous - проявлять расточительность в
предоставлении займов
to run out of (money) - кончаться, иссякать (о деньгах)
to pay for securities - оплачивать ценные бумаги
to repay a loan - погашать ссуду
vault - банковское хранилище
to deplete (reserves) - истощать, исчерпывать (запасы)
to curtail smth - сокращать, уменьшать что-либо
charge - зд. взимание повышенной процентной
ставки
the Bank Rate - учетная ставка банка
discount rate - банковский процент, учетная ставка
банка
rediscount rate - переучетная славка банка
Exercises on the Text