Text a. Banking

Read and translate the text.

One can’t imagine our life without bank services. There is a bank in every small town, and a big city may have tens of them. Bank is a commercial institution involved in a variety of financial activities. Banks deal mainly with making and receiving payments on behalf of their customers, accepting deposits and making short term loans to private individuals, companies. To put it simply, a bank seeks to “buy” money cheaply at an annual six – percent interest, for example, and to sell it dearly at an annual rate of 11%. There are many variations within this pattern, of course.

Naturally, the banks put their money where it brings them the highest profit. That is why they always keep up to date with the market situation. By shifting money of various “costs” from sphere to sphere, from one geographical region to another, the banks actively stimulate progress in industry, construction and agriculture.

Banks are interested in keeping most of their money in circulation so that it should bring them profit. They seek to reduce their lending rates in order to attract buyers.

The way in which a bank is organized 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. Central banks, for example, provide financial and banking services for the government of a country and its commercial banking system, implementing the government’s monetary policy. The main functions of a central bank are: to manage the government’s accounts; to accept deposits and grant loans to the commercial banks; to control the issue of banknotes; to help manage the exchange rate when necessary; to control the money supply; to hold the country’s reserves of gold and foreign currency; to deal with other central banks. Examples of major central banks include the Bank of England in the UK, The Federal Reserve Bank of the USA, the Deutsche Bundesbank in Germany, France’s Banque de France, The Central Bank of Russia and others.

Commercial banks exist to increase the economic growth of a country and raise the living standard of its population. On the other hand, the aim of commercial banks is to earn profits. Therefore they provide and develop services that can be sold at a price that will yield a profit. Bank services cover a large range of activities today. Among them are the following:

1. Current account services.

The current account pays no interest but it has other advantages. Firstly, it enables people to keep their money in a safe place. Secondly, it allows them to withdraw it at any time. Thirdly, it provides them with a cheque book so that they do no have to carry a lot of cash. Money is being paid into and paid out of the account as often as the customer finds convenient. A current account is used for handling day – to – day finance.

2. Deposit account services.

Companies and individuals can deposit cash resources that are not needed at present. They can withdraw the money either any day they need it or after a certain period in case of time deposits. A deposit account earns for the customer and is used for saving money. The bank invests the money that the customer pays in and in return, the bank pays the customer interest.

3. Other services: foreign exchange; foreign exchange transactions; services in foreign trade payments; granting loans; investment management services; cash dispensers; safe custody; bank credit cards and many others.

Several factors have combined to make banking an international business. These include the growth of multinational companies and of international capital markets, the increased competition between the banks themselves and important improvements in communications and transportation.

Exercise I. Match English and Russian equivalents.

1. on behalf of their customers

2. one can’t imagine

3. within this pattern

4. keep up to date

5. implementing the government’s

policy

6. to deal with other banks

7. current account pays no interest

8. to yield a profit

9. enables people to keep their

money

10. money is being paid into and

paid out of the account

1. иметь последние сведения (быть в курсе)

2. работать с другими банками

3. приносить доход

4. деньги вносятся на счет и снимаются со счета

5. от лица (от имени) своих клиентов

6. проводя политику правительства

7. дает возможность людям хранить свои деньги

8. невозможно представить

9. по текущему счету не выплачиваются проценты

10. в рамках этого приема (схемы, модели)

Exercise II. Choose the right word or word-combination.

1. Bank is a commercial … .

a) institute; b) institution; c) court.

2. That is why they always keep up to date with the market … .

a) problems; b) place; c) situation.

3. They seek to reduce their lending rates in order … buyers.

a) to attract; b) to help; c) to surprise.

4. The banks put their money where it brings them … profit.

a) the excess; b) the lowest c); the highest.

5. Commercial banks exist … the economic growth of a country.

a) to increase; b) to improve; c) to influence.

Exercise III. Complete the sentences according to the text.

1. Banks deal mainly with … .

2. By shifting money of various “costs” … .

3. Banks are interested in keeping … .

4. Central banks, for example, provide … .

5. Money is being paid … .

6. They can withdraw the money … .

Exercise IV. Answer the questions on the text.

1. What is a bank by definition?

2. In what way do banks stimulate progress in different fields of economy?

3. Why are banks interested in keeping their money in circulation?

4. Why do banks reduce their lending rates?

5. What are the main functions of a central bank?

6. What is the purpose of commercial banks?

7. Could you name the range of commercial banks’ services?

8. What are the advantages of current account?

9. What factors make banking an international business?

Exercise V. Imagine that your friend is thinking of opening a bank account. Try to help him answer his questions. Match the line in “A” with a line in “B”.

“A”

1. How can a bank help me arrange my future?

2. How can a bank help if I want to go abroad?

3. How can a bank account help me earn money?

4. If all my money is in bank, how can I pay shops and restaurants?

“B”

1. You can pay by cheque.

2. If you put your money into a deposit account, it will earn interest for you.

3. You can get travellers cheques and order foreign currency from a bank. In many Europeans countries, shops and restaurants accept your normal cheques as Eurocheques.

4. A bank can advise you on money problems in general. It can help you by lending you money and also with things like buying a house and running a business.

Exercise VI. Read the dialogue and reproduce it.

Richard: Good morning.

Cashier: Good morning, sir.

Richard: I’d like to open an account, please.

Cashier: Certainly, sir. Do you live in Geneva?

Richard: Yes, I’m at the Interpreter’s School.

Cashier: Are you a student?

Richard: Yes.

Cashier: What sort of account would you like?

Richard: A current account, I think.

Cashier: Have you got any large sums to deposit?

Richard: No, only a thousand francs or so a month.

Cashier: Well, we can open a current account with a check-book for you as

long as the initial sum is at least three thousand franks. But I’d advise you in your case to take an account that gives you interest and which is more practical. We normally advise students to open deposit accounts.

Richard: Can I take out money whenever I like?

Cashier: Yes. There are two or three types of account. They permit you to withdraw up to ten thousand francs a month.

Richard: Can I receive money directly from abroad?

Cashier: Certainly.

Richard: Do I need a passport?

Cashier: Yes.

Richard: I’m afraid I haven’t got it. Will my student card do?

Cashier: No, I’m afraid not.

Richard: I’ll come back later, then.

Cashier: Very good, sir.

Exercise VII. Retell the story about Richard.

Exercise VIII. Think and answer.

1. What is the difference between a current account and a deposit account?

2. How is a bank compared to any other business?

Exercise IX. Discuss in pairs or in groups.

You have some money to save. What will you do with this money? Will you simply put it in a box under the bed or make your money earn profit for you?