Vocabulary

Special Drawing Right специальное право заимствования

Reserve assets резервные активы

Legal tender законное платежное средство

To revise ересматривать

Weight вес

Reserve holdings езервы

To allocate выделять, распределять

Amendment поправка, исправление

Consecutive последовательный

To date на сегодняшний день

To total составлять, достигать

Reserve position езервная позиция

Exercise 17. Choose the correct explanation without using a glossary.

1. “to read over carefully and correct, improve, or update where necessary” is …

a) to revise

b) to reduce

c) to redeem

d) to look

2. “to distribute in shares or according to a plan; to allot” is …

a) to allure

b) to allude

c) to allocate

d) to give

3. “a change for the better; improvement” is …

a) fault

b) amendment

c) conclusion

d) asset

4. “following in order, without interruption; successive” is …

a) consecutive

b) considerable

c) consistent

d) continuing

5. “to find the total of; add; to amount (to) as a whole; to sum” is …

a) to count

b) miss

c) to consist of

d) to total

6. “anything owned that has exchange value; (in plural) all the entries on a balance sheet showing the entire resources of a person or business, including accounts and notes receivable, cash, inventory, equipment, real estate, etc.” is …

a) asset

b) share

c) holding

d) bond

7. “to add to, esp. so as to make up for a lack or deficiency” is …

a) to contemplate

b) to lose

c) to supplement

d) supply

8. “at the beginning; at first” means

a) initially

b) lately

c) firstly

d) in the long run

9. “enlargement; dilation; the amount, degree of enlargement” is …

a) equation

b) conclusion

c) exaltation

d) expansion

10. “to make simpler, less complex, etc; to make easier” is …

a) to simplify

b) to simper

c) complicate

d) to revise

Exercise 18. Reread the article of exercise 16 more carefully and complete the sentences given below using information from the article:

1. The Special Drawing Right (SDR) is an international reserve asset …

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2. The SDR serves as a unit of account for …

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3. The SDR has been used at times to denominate financial instruments but …

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4. …____________ was redefined in June 1974 as a basket of 16 currencies.

5. Since 1981, the SDRs basket has consisted of …

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6. …_______________________________________________the IMF has been authorized to allocate SDRs to member countries.

7. Because of considerable expansion in the IMF’s membership since SDRs were last allocated in 1981 …

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8. SDRs are counted as a part of a country’s international reserves …

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9. The share of SDRs in global holdings of nongold reserves has declined …

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Exercise 19. Single out the main facts of the article of exercise 16 and present them in a short review.

Exercise 20. Listen and retell the text. Write down 3-5 questions about the text. Underline all parts saying about the Paris Club.

Debt rescheduling is a form of debt reorganization in which debtors and creditors negotiate to defer payments of a principal and interest falling due in a specified interval for payment on a new schedule.

Some countries find it almost impossible to service their external debts. Recently, rescheduling external debts has become a widely accepted practice. Debt rescheduling occurs at the Paris Club for government and private debt owed to official creditors and the London Club for debt owed to commercial creditors.

The Paris Club is an informal forum where countries experiencing difficulties in paying the debts to governments and private institutions meet with their creditors to restructure these debts. The name might be quite misleading because in reality the Paris Club is not a club, nor is it a formal international organization. It has no offices, no secretariat, and above all, no charter. The Paris Club is an ad hoc institution with no legal status.

In part, the Paris Club’s confidentiality policy has prevented it from becoming known to a wider public. Creditors refrain from releasing any information pertaining to their assessment of a given debtor’s economic and financial situation or to the scope of debt relief granted. The onset of the international debt crisis in the early 1980s, however, brought public attention to the Paris Club and to its contribution to resolving the balance-of-payments disequilibria experienced by a growing number of developing countries and by some Central and Eastern European countries.

Over the years, the Paris Club has become a key instrument in implementing the international debt strategy. This strategy rests on two main pillars: internal reform and structural adjustment, supplemented by external financial assistance in the form of fresh money and debt relief. Despite the public’s recent discovery of the Paris Club, this forum has existed since 1956, when Argentina agreed to meet in Paris with official creditors to find a mutually acceptable basis for rescheduling payments due on officially supported export credits. In the late 1950s and 1960s, Brazil, Chile, and Turkey sought similar Paris Club reschedulings. Since 1980, 54 countries have rescheduled the total of 186 debt agreements.

Exercise 21. Translate the article into English. Pay attention to the use of tenses.

Что будет с курсом доллара к евро?

В первом полугодии 2003 года спекулянты явно играли на неопределенности – США ведут войну, никто не знает, что случится с американской экономикой. Может, следует запасаться евро? Тем более что ведущие европейские страны никакой войны не вели и даже бросили политический вызов Америке. После войны война на повышение продолжалась, и это даже вызвало у западных комментаторов недоумение. Действительно: что ж такого хорошего в западноевропейской политике по сравнению с американской, что европейская валюта так ценится? Все как раз наоборот – перспективы экономического роста США куда лучше, чем стран еврозоны. Дело пытались объяснить грандиозным дефицитом текущего платежного баланса США, а также тем, что американские процентные ставки заметно ниже европейских. Но, скорее всего, дело в том, что спекулянты просто привыкли к прибыльной игре на повышение евро и не хотели с ней расставаться. К тому же ожидались какие-то новые события на международной арене. Вроде агрессии против Сирии или Ирана. Как бы то ни было, спекулянты загнали курс до $1,19 за евро и немного испугались. Полугодие кончилось курсом примерно в $ 1,14 за евро – нужно же хоть изредка фиксировать прибыль.

Наш прогноз: во втором полугодии мировые валютные спекулянты не придумают ничего сверхъестественного, чтобы объяснить очередное повышение евро. Но и избавляться от единой европейской валюты спешить не будут, так что ее курс не упадет ниже $1,10.

«Коммерсант ВЛАСТЬ», 7 июля 2003

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LESSON 3

Финансовые рынки. Рынок облигаций

Exercise 1. Read and discuss the text that follows. Use the glossary given after it.

Trading in the bond market

People and organizations wanting to borrow money are brought together with those having surplus funds in the financial markets.

There are a great many different financial markets, each one consisting of many institutions, dealing with different instruments in terms of the instrument maturity and the assets backing it, and serving different types of customers.

Generally, financial markets are classified as money or capital markets and primary or secondary markets.

Money markets deal in short-term securities having maturities of one year or less. Capital markets deal in long-term securities having maturities greater than one year. An investor who purchases new securities is participating in a primary financial market. An investor who resells existing securities is participating in a secondary financial market.

So, when businesses, units of government or individuals cannot satisfy their needs for funds by revenue from sales of goods and services, they can turn to either debt financing (any process by which the firm gets cash or some other assets in return for a promise to pay an agreed upon sum plus interest) or equity financing (any process by which a firm raises funds in return for a share in its ownership and management).

Some sources of funds available to businesses (like issuing stock) are not available to governments. When revenues fall short of expenditures governments go into debt – they borrow short- and long-term funds by issuing bonds.

A bond is an instrument in which the issuer (debtor/ borrower) promises to repay to the lender/ investor the amount borrowed plus interest over some specified period of time. It should be stressed that one of the most important characteristics of a bond is the nature of its issuer. Issuers include federal (central) governments and their agencies, supranationals (such as the World Bank, the Asian Development Bank), municipal governments, and nonfinancial and financial corporations.

By far the largest issuers are central governments.

There is no uniform system for classifying the global bond markets. Quite a number of financiers consider it appropriate to use the following classification. From the perspective of a given country, the global bond market can be classified into two markets: an internal bond market and an external bond market. The internal bond market is also called the national bond market. It can be decomposed into two parts: the domestic bond market and the foreign bond market.

The domestic bond market is where issuers domiciled in the country issue bonds and where those bonds are subsequently traded. The foreign bonds market of a country is where bonds of issuers not domiciled in the country are issued and traded.

Bonds traded in the US foreign bond market are nicknamed Yankee bonds. In Japan, foreign bonds issued by non-Japanese entities are nicknamed Samurai bonds. Foreign bonds in the United Kingdom are nicknamed bulldog bonds, in the Netherlands – Rembrandt bonds and in Spain – matador bonds.

The external bond market, also called the international bond market, includes bonds with several distinguishing features: 1) they are underwritten by an international syndicate, 2) at issue they are offered simultaneously to investors in a number of countries, 3) they are issued outside the jurisdiction of any single country, and 4) they are in unregistered form. The external bond market is commonly referred to as the offshore bond market, or more popularly, the Eurobond Market. The Eurobond Market is divided into different submarkets depending on the currency in which the issue is denominated.

Computerization in bond markets has reduced costs of trading bonds and made them more convenient to hold and transfer: they are not issued in certificate form – they are only computer entries.

Notes:

In terms of the instrument maturity точки зрения сроков огашения финансового инструмента

When revenues fall short of expenditures когда доходы меньше расходов

…governments go into debt равительства осуществляют заимствования