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6.4. Read the text. History

Bankers' acceptances date back to the 12th century when they emerged as a means to finance uncertain trade, as banks bought bills of exchange at a discount. During the 18th and 19th centuries, there was an active market for sterling bankers' acceptances in London. When the United States Federal Reserve was formed in 1913, one of its purposes was to promote a domestic bankers' acceptance market to rival London's to boost US trade and enhance the competitive position of US banks. National banks were authorized to accept time drafts, and the Federal Reserve was authorized to purchase certain eligible bankers' acceptances, but today the US central bank no longer buys banker's acceptances (but instead buys mostly US government bonds from a Primary dealer).

6.5. Read the text. Comparison with other drafts

When a draft promises immediate payment to the holder of the draft, it is called a sight draft. Cheques written on demand deposits are examples of sight drafts. When a draft promises a deferred payment to the holder of the draft, it is called a time draft. The date on which the payment is due is called the maturity date. In a case where the drawer and drawee of a time draft are distinct parties, the payee may submit the draft to the drawee for confirmation that the draft is a legitimate order and that the drawee will make payment on the specified date. Such confirmation is called an acceptance — the drawee accepts the order to pay as legitimate. The drawee stamps ACCEPTED on the draft and is thereafter obligated to make the specified payment when it is due. If the drawee is a bank, the acceptance is called a banker's acceptance. Bankers acceptances are considered eligible collateral under the Treasury Tax & Loan (TT&L) Program under 31 CFR part 203

7. The major items in the current account are:

7.1. Words to remember также в табличке

  1. Goods balance

A. the difference between what Country receives for exports and what is paid for imports

  1. Services balance

B. This involves the balance of service exports and imports such as tourism, education, insurance, shipping and finance

  1. Net income

C. income received from Country’s owned assets overseas (credits) less any payment of income to overseas on foreign owned assets in Local Country (debits). These include interest payments on borrowings of the private (companies), and public (government) sectors and the return on investments in the form of rent, profits and dividends.

  1. Debits.

D. Services imported.

  1. The net income deficit

E. the major factor behind the current account deficits Local Country has experienced over the years.

  1. Net current transfers

F. refer to unearned payments and receipts of money used for short-term purposes. It occurs when no specific good or service has been supplied. This includes foreign aid to developing countries in the form of money for food or famine relief (if these funds are being used for capital investment they will be included in the capital and financial account), insurance claims and pensions.

  1. Credits

H. services exported are.