Vocabulary Exercises

1. Complete the sentences using the text:

1) Every country needs a central institution with...

2) Central banks are responsible for...

3) Central banks perform certain tasks for...

4) A central bank also acts as a banker to...

5) Central banks regulate a country's money supply by...

6) The bank of England is closely controlled by...

7) The Federal Reserve System of the United States...

2. Answer these questions, basing your answers on the text:

1) What does every country need to look after its monetary system?

2) What central banks do you know?

3) Central banks are responsible for an adequate supply of legal tender, aren't they?

4) Are central banks bankers "or producers" banks?

5) Where do the commercial banks borrow?

6) Does a central bank also act as a banker to its government?

7) What do central banks regulate?

8) Central banks in different countries enjoy different degrees of autonomy from their governments, don't they?

3. Say whether these statements are true or false and if they are false, say why:

1) Usually, the central bank is the sole note - issuing bank in a particular country.

2) The minting of coins is exclusively the responsibility of a separate bank.

3) Central banks perform certain tasks for commercial and specialized banks.

4) These accounts may be used to settle the net positions resulting from the clearing of cheques and credit transfers.

5) The commercial banks borrow directly or indirectly from each other.

6) A central bank typically manages the national debt.

7) Central banks are not concerned with the implementation of monetary policies.

8) A central bank regulates a country's money supply.

MONEY

The term "currency", in its general economic sense, is applied to the money of a particular country, such as the U.S. dollar, EURO, Pound sterling, Ukrainian hryvna, Russian ruble, the Japanese yen, etc.

According to their convertibility, currencies can be grouped into three general categories: "convertible currencies", "semi-convertible currencies", and "non-convertible currencies". Convertible currencies are those which can be freely bought and sold in the foreign exchange markets, at the rates of exchange prevailing at the time of purchase or sale. Semi-convertible currencies can be bought and sold only through the local central bank, at predetermined rates of exchange. A large number of third-world currencies fall into this category. Transactions are limited to commercial deals. Non-convertible currencies are those whose circulation is restricted by the local monetary authorities. The rates of exchange are artificially pegged, usually at a level much higher than the rates prevailing on the black market, or parallel market, which inevitably develops.

In practice, there are three main convertible currency areas: the U.S. area, which comprises essentially the U.S. and Canadian dollars; the European area, with the EURO; and the Asian area, with the Japanese yen, Malaysian and Singapore dollars. The governments of these countries allow unregulated purchases and sales, and the amounts of money exchanged- in the foreign exchange markets are very large.

The world's major currency is the U.S. dollar, followed by the EURO and the Japanese yen. The importance of the U.S. dollar sterns from a number of factors, some domestic and some international: the United States has the world's largest capital market, and there are more dollars in the world than all other major currencies put together. Invoicing for raw materials and commodities, especially oil, gas, and wheat, is in U.S. dollars. It is also interesting to note that the dollar is by far the largest component of the foreign currency reserves held by the world's major central banks (reserve currency).

Дата добавления: 2015-11-14