V. Are the following statements true or false?

1. Almost every society now has a money economy based on coins and paper notes of one kind or another.

2. Barter was a system of indirect exchange of goods.

3. Barter, however, was a very satisfactory system.

4. Precious metals gradually took over because, when made into coins, they were portable, durable, recognizable and divisible into larger and smaller units of value.

5. Most governments now issue paper money in the form of notes.

6. These notes are used by governments and authorized banks, and are known as legal tender.

7. Checks and money orders are legal tender.

8. Credit is offered only when creditors believe that they get a good chance of obtaining legal tender when they present such instruments at a bank or other authorized institution.

9. If too much money is available, its value decreases, and it does not buy as much as it did, say, five years earlier.

10. Private production of token money is legal.

VI. Translate into English:

1. Деньги — мера стоимости товаров и услуг, выполняющая роль всеобщего эквивалента, то есть они выражают в себе стоимость всех других товаров и обмениваются на любой из них.

2. Обычно, деньгами становится товар с высокой ликвидностью, то есть тот, который легче всего обменять.

3. Существует несколько функций денег.

4. Во-первых, и прежде всего, деньги являются средством платежа, или обращения; деньги можно использовать при покупке и продаже товаров и услуг.

5. Деньги выступают также мерой стоимости.

6. Общество считает удобным использовать де­нежную единицу в качестве масштаба для соизмерения относительных стоимостей различных благ и ресурсов.

7. Деньги служат средством сбережения.

8. Поскольку деньги являются наиболее ликвидным товаром, то есть таким, который можно без проблем продать (обменять), то они являются очень удобной формой хранения бо­гатства. Это, однако, не единственная форма хранения богатства.

9. Во время упадка в экономике, при высокой инфляции и обесценении денег, население, скорее все­го, будет хранить богатство в виде недвижимости или других дорогостоящих товаров - предметах искусст­ва, драгоценностях.

10. Деньги, которые, являются долговыми обязательства­ми государства, коммерческих банков и сберегательных учреждений, имеют стоимость благодаря товарам и ус­лугам, которые приобретаются за них на рынке.

VII. Answer some questions:

1. What is money?

2. What are the functions (uses) of money?

3. What's a barter economy?

4. How are goods exchanged in a barter economy?

5. Why was the barter an unsatisfactory system?

6. Can you imagine a world without money in the form of coins and paper currency? Why?

7. What qualities should money possess?

8. Does modern money have any serious disadvantages as means of storing up value?

9. What else can be used instead of money as a store of value?

10. What is the unit of account in our country?

11. What are different kinds of money?

12. What is commodity money?

13. Explain in your own words what token money means?

14. What is IOU money?

15. What is a coin?

Литература

Основная: 1, 5, 6.

Дополнительная: 2, 3, 4, 7.

TOPIC 9.

BANKS AND BANKING

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money.

The way in which a bank is organised and operates is determined by its objectives and by the type of economy in which it conducts its business. A bank may not necessarily be in business to make a profit.

Banks are closely concerned with the flow of money into and out of the economy. They often co-operate with governments in efforts to stabilize economies and to prevent inflation. They are specialists in the business of providing capital, and in allocating funds on credit.

Banks have three essential functions, which are:

- deposits

- payments

- credits

These three functions are the basis of the services offered by banks. They make it possible for banks to generate profits and to achieve their operating aims.

Banks normally receive money from their customers in two distinct forms: on current account, and on deposit account. With a current account, a customer can issue personal checks. No interest is paid by the bank on this type of account. With a deposit account, however, the customer undertakes to leave his money in the bank for a minimum specified period of time. Interest is paid on this money.

The bank in turn lends the deposited money to customers who need capital. This activity earns interest for the bank, and this interest is almost always at a higher rate than any interest which the bank pays to its depositors. In this way the bank makes its main profits. The primary function of a bank today is to act as an intermediary between depositors who wish to make interest on their savings, and borrowers who wish to obtain capital. The bank is a reservoir of loanable money, with streams of money flowing in and out. For this reason, economists and financiers often talk of money being liquid, or of the liquidity of money. Many small sums which might otherwise be used as capital are rendered useful simply because the bank acts as a reservoir. The system of banks rests upon a basis of trust. Innumerable acts of trust built up the system of which bankers, depositors and borrowers are part. They all agree to behave in certain predictable ways in relation to each other, and in relation to the rapid fluctuations of credit and debit. Consequently, business can be done and checks can be written without any legal tender visibly changing hands.

COMPREHENSION CHECK

I. Give English equivalents to the following:

Тесно связано, усилия по стабилизации, предотвратить инфляцию, распределение фондов, безопасное хранение, процент не выплачивается, зарабатывать, более высокая процентная ставка, вкладчики, ликвидность денег, основная прибыль, хранилище, опираться на, колебания, банковское обслуживание ча­стных лиц, принимать депозиты, широкий спектр услуг, банковская гарантия, гарантировать платеж,

II. Read and translate the definitions of the basic banking services terms:

Banking services

III. Complete these sentences with appropriate words оr word combinations and translate the sentences into Russian:

1. Banks cooperate with……in efforts to stabilize economies.

2. Banks originated as places to which people took their ….. for safekeeping.

3. No interest is paid by the bank on …..

4. Banks lend the deposited money to… who need capital.

5. The bank is… of loanable money.

6. The system of banks… a basis of trust.

7. Bankers, depositors and borrowers agree to behave ….. in relation to each other.

8. The primary function of a bank is to act as.... between depositors and borrowers.

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