Vocabulary

MNC (multinational company) многонациональная компания (корпорация)

Anonymous безымянный, анонимный

Moody’s (Investors Service) ведущее агентство по установлениюрейтингов ценных бумаг

Standard and Poor’s (Corporation) ведущая фирма по установлению рейтингов ценных бумаг

To list (зд.) зарегистрировать на бирже

ECU (European Currency Unit) Европейская валютная единица (ЭКЮ)

Exercise 11. Translate the dialogue, using the vocabulary, given after it. Sum up its content and act it out.

Foreigner: Financial markets are generally classified as money or capital markets and primary or secondary markets. Do you follow this classification?

Russian: Yes, we do. But structurally we divide our financial market into a hard-currency market, a bank credit market, debt and equity markets and the market of gold and precious metals.

F.: I see. My experience in Russia tells me that your investors prefer operations in the hard currency market to investing in the real sector of your economy.

R.: Yes, our capital markets are thin, weak and vulnerable.

F.: It’s a pity, because the debt market, for one, is a powerful instrument of monetary policy. Many governments issue bonds to solve their financial problems and to cover budget deficits.

R.: And how is the international bond market performing this year?

F.: Volumes of issuance have been rather high, though fewer bonds have appeared from emerging markets of Eastern Europe.

R.: Investors are still viewing borrowers in emerging markets too risky, I suppose. Western sovereign borrowers are the main players in the market, aren’t they?

F.: Well, yes, but many are trying to slow down their borrowing and reduce their national debt.

R.: This leaves room for other borrowers, right?

F.: Yes, supranationals have diversified tremendously, both in their products and markets. Corporate borrowers are also very active.

R.: But after the crisis investors have become more cautious, haven’t they?

F.: That’s right. Credit ratings of borrowers have become much more important. Investors demand transparency and liquidity. Borrowers are finding it much harder and more expensive to raise sufficient funds on the international debt market.

R.: How has the introduction of the Euro affected the bond market?

F.: Some are thinking of Euro-denominated bond issues as the bond markets are moving away from the dollar in favour of the Euro. The competition is becoming keener.

R.: We are entering a new and turbulent phase in the debt markets. Many people believe that the worst is yet to come.

Vocabulary

Structurally структурно

Hard-currency market рынок твердой валюты

Bank credit market рынок банковских кредитов

Debt market рынок ссудного капитала

Equity market рынок акций

Market of gold and precious metals рынок золота и драгоценных металлов

Real sector реальный сектор

Thin узкий

Issuance выпуск (акций)

Emerging markets молодые, развивающиеся рынки

Sovereign borrower суверенный заемщик, государство-заемщик

Cautious осторожный

Credit rating осторожный

Euro евро (валюта)

Turbulent бурный, неспокойный

Exercise 12. Answer the following questions:

1. What are the components of the Russian financial market?

2. Are volumes of issuance big in the market?

3. Who are the main players in the bond market?

4. What tendencies have been registered in the market lately?

5. How will the introduction of the Euro affect the market?

Exercise 13. Find the Russian equivalents for the following:

1. capital markets

__________________________________________________________________________

2. to divide markets

__________________________________________________________________________

3. to invest in the real sector

__________________________________________________________________________

4. a powerful instrument of monetary policy

__________________________________________________________________________

5. to solve financial problems

__________________________________________________________________________

6. to cover budget deficits

__________________________________________________________________________

7. to slow down borrowing

__________________________________________________________________________

8. to reduce the national debt

__________________________________________________________________________

9. to diversify tremendously

__________________________________________________________________________

10. to demand transparency and liquidity

__________________________________________________________________________

Exercise 14. Find the synonyms for the words in italics.

1. The Eurobond Market is a major source of corporate financing… .

__________________________________________________________________________

2. This market permits lenders to lend directly to borrowers across the national borders.

__________________________________________________________________________

3. Banks play a major role in the Eurobond market by bringing together lenders and borrowers… .

__________________________________________________________________________

4. The participating banks will receive a fee for each of these services rendered to the borrower or investor.

__________________________________________________________________________

5. In recent years there has been a continued rapid expansion of Eurobond issuance.

__________________________________________________________________________

6. It is the ECU bond market which proved to be popular a few years ago.

__________________________________________________________________________

7. … paved the way to the single Eurobond market.

__________________________________________________________________________

8. Credit ratings of borrowers have become much more important.

__________________________________________________________________________

9. Borrowers are finding it much harder and more expensive to raise sufficient funds on the international debt market.

__________________________________________________________________________

Exercise 15. Translate the sentences into Russian.

1. Financial markets are generally classified as money or capital markets and primary or secondary markets.

___________________________________________________________________________

__________________________________________________________________________

2. But structurally we divide our financial market into a hard-currency market, a bank credit market, debt and equity markets and the market of gold and precious metals.

_________________________________________________________________________

__________________________________________________________________________

3. My experience in Russia tells me that your investors prefer operations in the hard currency market to investing in the real sector of your economy.

__________________________________________________________________________

__________________________________________________________________________

4. It’s a pity, because the debt market, for one, is a powerful instrument of monetary policy.

__________________________________________________________________________

5. Many governments issue bonds to solve their financial problems and to cover budget deficits.

__________________________________________________________________________

__________________________________________________________________________

6. Volumes of issuance have been rather high, though fewer bonds have appeared from emerging markets of Eastern Europe.

__________________________________________________________________________

__________________________________________________________________________

7. Investors are still viewing borrowers in emerging markets too risky, I suppose.

__________________________________________________________________________

8. Borrowers are finding it much harder and more expensive to raise sufficient funds on the international debt market.

__________________________________________________________________________

__________________________________________________________________________

9. Some are thinking of Euro-denominated bond issues as the bond markets are moving away from the dollar in favour of the Euro.

__________________________________________________________________________

__________________________________________________________________________

10. We are entering a new and turbulent phase in the debt markets. Many people believe that the worst is yet to come.

__________________________________________________________________________

__________________________________________________________________________

Exercise 16. Read the article below quickly to pick out the main economic indicators. Then study the vocabulary given after it.

It was only Brazil that ran up the white flag last week when it halted the defense of its currency on the world foreign exchanges. The defeat of Brazil was also a defeat for the International Monetary Fund, the Group of Seven and the ill-conceived set of policy recommendations which have ensured that a problem in South-East Asia has the potential to turn into a full-scale global crisis.

The orthodox approach insisted on by the IMF in country after country has proved a disaster. If it were a private firm, the IMF’s board would have been sacked long ago.

There will doubtless be those who will say that there is no reason to reassess the policies which underpin the free market-deflation, austerity, high interest rates, privatization and capital liberalization.

But last week’s events are a crushing blow to that orthodox approach. Their analysis of the crisis has been wrong from the start, and they have not the first idea of what to do now, apart from more of the same.

The IMF has a banker’s mentality. It deals with central banks and thinks of itself as a central bank. It is secretive, lacks transparency and has a fixation with narrowly defined indicators. The IMF’s obsession with budget deficits, curbing inflation financial liberalization has engendered a damaging short-termism that has held back long-term development.

Reducing budget deficits through public-spending cuts while simultaneously freeing up domestic capital markets has simply had the effect of raising debt-servicing costs, thereby crowding out investment in health and education.

There have been signs during the last 18 months of a growing fissure between the IMF’s thinking and that of its sister organization – the World Bank. The bank’s report on the Asian crisis concludes that insistence on pushing up interest rates was a crucial blunder that worsened the situation, and that it would have been better to have let currencies fall and keep interest rates low in order to keep economies moving forward.