Vocabulary notes

consume – потреблять; расходовать

productive endeavors – продуктивные усилия

channel – направлять (в определённое русло)

productive investment – продуктивные капиталовложения

forgone consumption – неиспользованное потребление

sit idly in money balances - сохранять неиспользуемыми денежные

средства

returns – доход, прибыль

additions – прирост

stock – (зд) фонд

capital goods – средства производства; основной (вещественный)

капитал ; инвестиционные (капитальные) товары

initial public offering (IPO) – первый выпуск акций

ultimate lender – первичный (основной) кредитор

TEXT 5

International banking services

International banks can be characterized by the types of services they provide that distinguish them from domestic banks. Foremost, international banks facilitate the imports and exports of their clients by arranging trade financing. Additionally, they serve their clients by arranging for foreign exchange necessary to conduct cross-border transactions and make foreign investments. In conducting foreign exchange transactions, banks often assist their clients in hedging exchange rate risk in foreign currency receivables and payables through forward and options contracts. Since international banks have the facilities to trade foreign exchange, they generally also trade foreign exchange products for their own account.

Major distinguishing features between domestic banks and international banks are the types of deposits they accept and the loans and investments they make. Large international banks both borrow and lend in the Eurocurrency market. Additionally, they are frequently members of international loan syndicates, participating with other international banks to lend large sums to MNCs needing project financing and sovereign governments needing funds for economic development. Moreover, depending on the regulations of the country in which it operates and its organizational type, an international bank may participate in the underwriting of Eurobonds and foreign bonds, an activity allowed only for investment banks in the United States or the investment banking arms of bank holding companies. Banks that perform both traditional commercial banking functions and engage in investment banking activities are often called merchant banks.

International banks frequently provide consulting services and advice to their clients. Areas in which international banks typically have expertise are foreign exchange hedging strategies, interest rate and currency swap financing, and international cash management services. Not all international banks provide all services, however. Banks that do provide a majority of these services are commonly known as universal banksor full service banks.

Vocabulary notes

facilitate – облегчать

trade financing – финансирование торговли

hedge – (n) хедж (срочная сделка, заключённая для страхования от

возможного падения цены); (v) хеджировать, страховать от

потерь

hedging – хеджирование (страхование от потерь)

receivables – счета к получению; дебиторская задолженность

payables – счета к оплате; кредиторы

forward and option contracts – форвардные и опционные контракты;

(1. форвардный контракт – контракт купли-

продажи с поставкой и расчётом в будущем

2. опционный контракт – право купли-

продажи по фиксированной цене в обмен на

уплату определённой суммы [премии] )

for one’s own account – за собственный счёт

Eurocurrency market – евровалютный рынок

MNCs = multinational corporations – транснациональные корпорации

project financing – проектное финансирование

underwriting of Eurobonds – андеррайтинг (гарантированное размещение,

страхование) еврооблигаций

investment bank – инвестиционный банк (специализирующийся на

эмиссии и торговле ценными бумагами)

arm – отделение, отдел

merchant bank – торговый банк

expertise – (зд) опыт

swap – своп, обмен обязательствами или активами

interest rate swap – процентный своп (обмен процентными платежами по

кредитным обязательствам)

currency swap – валютный своп (обмен долгосрочными кредитными

обязательствами в одной валюте на равные

обязательства в другой валюте)

cash management – контроль и регулирование денежных операций

universal bank – всемирный банк

TEXT 6

DEFINITION OF A FINANCIAL CRISIS

Financial crises have a variety of potential characteristics, but the term usually refers to an exchange rate crisis, a banking crisis, or some combination of the two.

A banking crisisoccurs when the banking system becomes unable to perform its normal lending functions, and some or all of a nation’s banks are threatened with insolvency. A bank, like any other business, is considered insolvent or bankrupt if its assets are less than its liabilities, or, to put it another way, if its net worth is negative.

The primary role of banks is to intermediate between savers and borrowers. If the businesses that borrow from a bank go under, then the bank cannot pay back its depositors, and the bank may go out of business as well. Disintermediation occurs when banks are unable to act as intermediaries between savers and investors. Disintermediation is a serious problem with negative economic consequences.

When a bank fails, everyone that deposited money in the bank loses all or a portion of their money, unless the country has a functioning deposit insurance system. The loss of savings causes households to cut back on consumption and spreads the recessionary effect wider and wider through the economy. This is one way a crisis gets transmitted within an economy. Unaffected banks may stop making new loans as they take a cautious approach, new investment slows or stops altogether, layoffs occur, and the economy falls deeper into the vicious circle of a downward spiraling recession.

An exchange rate crisisis caused by a sudden and unexpected collapse in the value of a nation’s currency. This can happen under either a fixed, flexible, or intermediate type of exchange rate. If the exchange rate system is some form of a fixed exchange rate, the crisis entails a loss of international reserves, followed by a sudden devaluation once it appears that the reserves will run out. Devaluation is intended to accumulate reserves, or to converse existing reserves, by making the rate of exchange less favorable to people trying to convert their domestic currency to dollars or another international reserve currency. If a country uses some form of flexible exchange rate, an exchange rate crisis involves a rapid and uncontrolled depreciation of the currency.

Similar to the effects of a banking crisis, an exchange rate crisis often results in a steep recession. There are several channels through which recessionary effects may be transmitted, but one of the most common channels is the banking system.