10. Read and translate text b using a dictionary Text b

Banks carrying lending and investment operations have the use of the money of their clients from the moment they pay their money into the bank till the moment they draw it out. The accounts they hold with the bank have credit balances and are called deposits.

Deposits are the raw material of banking and, thus, represent the ultimate source of bank profitability and growth. They are a unique item on a bank's balance sheet that clearly distinguishes a bank from other types of business firms. The building up of the bank's deposits is an important part of any bank manager's job.

There has been a steady drift of funds out of current into deposit accounts and also away from the banks into interest-earning deposits of other financial institutions. However, many experts find it surprising that over half of all bank deposits are still current account deposits on which the banks pay no interest, and in fact on which they often levy charges to meet the expenses of servicing the account.

In the U.S. there are three main types of deposits. Demand deposits are similar to current accounts. They are more commonly known as checking accounts because they are sums standing to the credit of the customer which the bank undertakes to make immediately available to meet checks drawn against them, or of course as cash across the counter. They are the principal means of making payments.

Savings deposits generally are in small dollar amounts; they bear a relatively low-interest rate but may be withdrawn by the depositor with little or no notice. These deposits are designed to attract funds from customers who wish to set aside monies in anticipation of future expenditures. While their interest cost is higher, thrift deposits are generally less costly for a bank to process or manage. Passbook savings deposits and statement savings deposits are the main types of saving plans. Passbook savings deposits are sold to household customers in small denominations. The customers are given small booklets showing current balances in the account, any interest earnings, deposits and withdrawals. Usually a passbook must be presented by a depositor to a bank teller in order to make deposits or withdrawals. Statement savings deposits are evidenced only by computer entry. The customer can get monthly computer printouts showing all the relevant information.

Time deposits carry a fixed maturity and offer the highest interest rates a bank can pay. Time deposits may be divided into non-negotiable certificates of deposit (CDs), which are usually small, consumer-type accounts, and negotiable CDs, that may be traded in the open market and are purchased mainly by corporations.

During the 1970s and 1980s new forms or checkable (demand) deposits appeared, combining the essential features of both demand and savings deposits. These transaction accounts include negotiable orders of withdrawal (NOWs)* and automatic transfer services (ATS)*. NOW accounts may be drafted to pay bills but also earn interest, while ATS is a preauthorized payments service in which the bank transfers funds from an interest-bearing savings account to a check­ing account as necessary to cover checks written by the customer. Two relatively new transaction accounts—money market deposits accounts (MMDAs)*** and Super NOWs —were offered in 1983. MMDAs, designed to compete directly with the high-yielding share accounts offered by money market mutual funds, and Super NOWs may carry prevailing market rates on short-term liquid funds. Both can be drafted by check, automatic withdrawal or telephone transfer, but the number of permissible withdrawals from MMDAs is limited. MMDAs may be held by an individual, business firm, or unit of government, but Super NOWs can be held only by individuals, governments, and nonprofit organizations.

Each of the different types of deposits carries a different rate of interest or yield to the depositor. In general, the longer the maturity of a deposit, the greater the yield that must be offered. For example, NOW deposits and MMDAs are subject to immediate withdrawal by the customer and, accordingly, their offer rate to bank customers is among the lowest of all deposits. In contrast negotiable CDs and deposits of a year or longer to maturity often carry rates higher by a full percentage point or more. The size and perceived risk exposure of the offering banks also play an important role in shaping deposit interest rates. Another key factor is the marketing philosophy and objectives of the offering bank.

The mix of bank deposits has changed dramatically in recent years. Demand deposits and low-yield savings deposits have declined as a percentage of bank funds, while more costly interest-bearing accounts such as MMDAs have grown rapidly. However, the particular types of deposits held by a bank at any moment of time depend, most importantly, on the public's demand for deposit services and on bank fund-raising policies, including the service fees charged and the interest rates offered on various deposit plans.

* NOW account — нау-счет; текущий счет с выплатой процентов и списанием по безналичным расчетам;

** ATS account — счет автоматического перечисления средств;

*** money market deposit account (MMDA) — депозитный счет денежного рынка.