Exercise 2. Vocabulary

Find words with the same meaning

par. 1. put off till later

vital

Find words with the opposite meaning

par. 2,3. to be unwilling

take away

reject

planned event

What words correspond to the definitions

par. 4 shared by two or more people

the performance of work for another

Explain in your own words

par. 5. trading

barter economy

swap

money

par. 6. accounts

medium of exchange

quoted

Find words with the same meaning

par. 7. without value

merchandize

to reduce value

par. 8. always

sum of money

serving to avoid difficulty

giving the name or details of

absolutely necessary

par. 9. major

changeless

Find words with the opposite meaning

par. 10 in a minor way

unusual

to increase

cheap

par. 11. separately

is less than

very large

Find words with the same meaning

par. 12-13. limitation

against the law

Find words with the opposite meaning

par. 14. be under no compulsion to

public

particularly

Activity 2. Hryvnia: the New Ukrainian Currency

This article was published in Panorama in January 1997 and was devoted to the introduction of the new currency in Ukraine – the hryvnia. Read this article and find answers to the following questions:

1. Why wasn’t the new currency introduced immediately after the proclamation of independence?

2. What is Karbovanets (coupon)?

3. Why was the new currency introduced into circulation in early 1996, although it was printed in 1992?

4. What are characteristic features of the Ukrainian currency market?

HRYVNIA: THE NEW UKRAINIAN CURRENCY

Ukrainian currency: History

In one of his speeches shortly after Ukraine gained its independence, Mr. Kravchuk, the first president of Ukraine, proclaimed that Ukraine will become fully independent only after three major objectives are achieved: it must possess its own state symbols, including the flag and national anthem, its own army and its own currency. The first two objectives were relatively easy to achieve and soon after proclaiming independence, Ukrainian soldiers paraded along the main street, Khreshchatyk, carrying blue and yellow Ukrainian flags and singing the old Cossack anthem.

The task of introducing the new currency has proved to be a challenge for the many Ukrainian governments which have changed since independence. Firstly, Ukraine inherited from the former USSR an economy which was dominated by heavy industry. Major Ukrainian enterprises, such as the largest ore enrichment factories in Krivy Rig and Dnipropetrovsk, were merely suppliers to a larger production cycle. One of the most illustrious cases is the Mykolaiv Aluminium Factory which received bauxites from mines in Guinea, enriched them and sent them to Siberia for further processing.

Secondly, Ukraine lacked a developed banking system and functioning currency markets. With the breakdown of the Soviet Union, Ukraine lost not only foreign exchange reserves kept in Zovnisheconombank vaults in Moscow, but, more importantly, the country lost access to the skills and experience of banking experts and professionals who worked in the USSR Central Bank in Moscow.

The banking system needed rapid transformation from a system in which the vast majority of business was carried out by Ukrainian subsidiaries of the five state-owned banks with headquarters in Moscow, to a system where a number of private banks could compete for both clients and money.

When the Ukrainian banking system became fully separate from the banking systems of the former USSR countries and 'old' Russian Rubles could not serve as a means of payment for long, the introduction of a transitional currency, Karbovanets or coupon, was a logical and necessary move by the National Bank of Ukraine (NBU). Without foreign exchange reserves and a proper banking system in place, however, it started to follow the fate of all other transitional currencies in the former Soviet republics; rapidly depreciating in value against any convertible currency. If in January 1992, shortly after its introduction, it was valued at slightly more than 100 coupons to US $1, in a year it was already 637 coupons. A number of factors, such as the development of 'shadow' economy, an underdeveloped tax collection system and accumulating debt for supplies of oil and gas from Russia contributed towards rapid devaluation of the coupon. It took Ukraine four years and six governments to get itself ready for the new currency.

New Ukrainian currency: Why in 1996?

At a glance, this looks strange. Bills which were introduced into circulation in late 1996, were printed in early 1992. Four years between these dates,

however, saw major changes in the Ukrainian economy.

Banking evolved from the basis of a pan-USSR banking system in which each of the big five sate-owned banks operated in a specific area of banking business without competition with each other, to a normal Western-style two-tier banking system with the National Bank of Ukraine supervising and monitoring more than 200 commercial banks. Large formerly state-owned banks were privatized and partly restructured. Increased competition from the large newly emerged banks, such as Ukrinbank and PrivatBank, made them more competitive.

The government learned how to make ends meet without the need to switch on the printing machine to cover holes in the state budget. The National Bank of Ukraine was turned into an independent central banking institution and started to exercise a high degree of control over the financial sector of the economy. A strict reporting system for banks has been introduced which decreased the risk of collapses in the banking sector which plagued Russia and some Baltic states.

The tax system became less prohibitive. Not only tax rates for both businesses and individuals were revised downwards, but the system itself became simpler. In addition, strong efforts by tax collecting agencies to enforce the tax law for many small businesses started to have an impact and tax revenue started to pick up.

Inflation was curbed from four-digit figures per annum to a more sustainable 40 per cent.

Privatisation allowed the government to shed a number of unprofitable enterprises from the state's balance sheet.

Tactically, the date was undoubtedly influenced by the factors of a political nature. Ukraine was preparing to celebrate its fifth anniversary of independence and the introduction of the new currency was a good addition to the anniversary fireworks and parades.

Дата добавления: 2015-08-03