Imf's main responsibilities:

• promoting international monetary cooperation;

• facilitating the expansion and balanced growth of international trade;

• promoting exchange stability;

• assisting in the establishment of a multilateral system of payments; and

• making its resources available (under adequate safeguards) to members experiencing balance of payments difficulties.

IMF is responsible for ensuring the stability of the international monetary and financial system—the system of international payments and exchange rates among national currencies that enables trade to take place between countries. The Fund seeks to promote economic stability and prevent crises; to help resolve crises when they do occur; and to promote growth and alleviate poverty. It employs three main functions—surveillance, technical assistance, and lending—to meet these objectives.

Main Sources of financing:

• Quotas. Quota subscriptions generate most of the IMF's financial resources. Each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy.

• Gold holdings. The IMF's gold holdings are worth about $103 billion as of end-March 2008 – 3rd largest holder.

• Lending and borrowing

IBRD - Founded in 1944 to help Europe recover from World War II, IBRD is one of five institutions that make up the World Bank Group. It works with middle-income and creditworthy poorer countries to promote sustainable, equitable and job-creating growth, reduce poverty and address issues of regional and global importance. 185 member countries. Work closely with IMF and other international institutions.

• supports long-term human and social development needs that private creditors do not finance;

• preserves borrowers' financial strength by providing support in crisis periods, which is when poor people are most adversely affected;

• uses the leverage of financing to promote key policy and institutional reforms (such as safety net or anticorruption reforms);

• creates a favorable investment climate in order to catalyze the provision of private capital;

• provides financial support (in the form of grants made available from the IBRD's net income) in areas that are critical to the well-being of poor people in all countries.

EBRD - The European Bank for Reconstruction and Development was established in 1991 when communism was crumbling in central and eastern Europe and ex-soviet countries needed support to nurture a new private sector in a democratic environment. Today the EBRD uses the tools of investment to help build market economies and democracies in countries from central Europe to central Asia. It is owned by 61 countries and two intergovernmental institutions. it invests mainly in private enterprises, usually together with commercial partners. It provides project financing for banks, industries and businesses, both new ventures and investments in existing companies. EBRD is funded by a subscribed capital totalling EUR 20 billion (EUR 5 billion paid-in and EUR 15 billion callable), the EBRD has a solid capital base. The strength of the Bank's capital and its prudent operational and financial policies are reflected in the EBRD's credit rating of AAA.

Through its investments, the EBRD promotes

• Structural and sectoral reforms

• Competition, privatisation and entrepreneurship

• Stronger financial institutions and legal systems

• Infrastructure development needed to support the private sector

• Adoption of strong corporate governance, including environmental sensitivity

BIS is an international organisation which fosters international monetary and financial cooperation and serves as a bank for central banks. Established on 17 May 1930, the BIS is the world's oldest international financial organisation. Its customers are central banks and international organisations.The BIS fulfils this mandate by acting as:

• a forum to promote discussion and policy analysis among central banks and within the international financial community

• a centre for economic and monetary research

• a prime counterparty for central banks in their financial transactions

• agent or trustee in connection with international financial operations

16. Forms of state and municipal borrowings.

Municipal bond (or muni) is a bond issued by a state, city or other local government, or their agencies. Potential issuers of municipal bonds include cities, counties, redevelopment agencies, school districts, publicly owned airports and seaports, and any other governmental entity (or group of governments) below the state level. Municipal bonds may be general obligations of the issuer or secured by specified revenues. Interest income received by holders of municipal bonds is often exempt from the federal income tax and from the income tax of the state in which they are issued, although municipal bonds issued for certain purposes may not be tax exempt.

Municipal bonds are issued by states, cities, and countries, or their agencies (the municipal issuer) to raise funds. The methods and practices of issuing debt are governed by an extensive system of laws and regulations, which vary by state. Bonds bear interest at either a fixed or variable rate of interest.

The issuer of a municipal bond receives a cash payment at the time of issuance in exchange for a promise to repay the investors who provide the cash payment (the bond holder) over time. Repayment periods can be as short as a few months (although this is rare) to 20, 30, or 40 years, or even longer.

The issuer typically uses proceeds from a bond sale to pay for capital projects or for other purposes it cannot or does not desire to pay for immediately with funds on hand. Tax regulations governing municipal bonds generally require all money raised by a bond sale to be spent on one-time capital projects within three to five years of issuance.[1] Certain exceptions permit the issuance of bonds to fund other items, including ongoing operations and maintenance expenses, the purchase of single-family and multi-family mortgages, and the funding of student loans, among many other things.

Because of the special tax-exempt status of most municipal bonds, investors usually accept lower interest payments than on other types of borrowing (assuming comparable risk). This makes the issuance of bonds an attractive source of financing to many municipal entities, as the borrowing rate available in the open market is frequently lower than what is available through other borrowing channels.

Municipal bonds are one of several ways states, cities and counties can issue debt. Other mechanisms include certificates of participation and lease-buyback agreements. While these methods of borrowing differ in legal structure, they are similar to the municipal bonds described in this article.

Municipal bond holders

Municipal bond holders may purchase bonds either directly from the issuer at the time of issuance (on the primary market), or from other bond holders at some time after issuance (on the secondary market). In exchange for an upfront investment of capital, the bond holder receives payments over time composed of interest on the invested principal, and a return of the invested principal itself (see bond).

Repayment schedules differ with the type of bond issued. Municipal bonds typically pay interest semi-annually. Shorter term bonds generally pay interest only until maturity; longer term bonds generally are amortized through annual principal payments. Longer and shorter term bonds are often combined together in a single issue that requires the issuer to make approximately level annual payments of interest and principal. Certain bonds, known as zero coupon or capital appreciation bonds, accrue interest until maturity at which time both interest and principal become due.

TYPES:

• General obligation bonds promise to repay based on the full faith and credit of the issuer; these bonds are typically considered the most secure type of municipal bond, and therefore carry the lowest interest rate.

• Revenue bonds promise repayment from a specified stream of future income, such as income generated by a water utility from payments by customers.

• Assessment bonds promise repayment based on property tax assessments of properties located within the issuer's boundaries.

In addition, there are several other types of municipal bonds with different promises of security.

Because municipal bonds are most often tax-exempt, comparing the coupon rates of municipal bonds to corporate or other taxable bonds can be misleading. Taxes reduce the net income on taxable bonds, meaning that a tax-exempt municipal bond has a higher after-tax yield than a corporate bond with the same coupon rate.

This relationship can be demonstrated mathematically, as follows:

Rm=rc(1-t)

where

• rm = interest rate of municipal bond

• rc = interest rate of comparable corporate bond

• t = tax rate

17. Inter-budgetary relations in the Russian Federation.

Межбюджетные отношения — это отношения между органами государственной власти РФ, субъектов РФ и местного самоуправления. Они строятся на следующих принципах:

• сбалансированность интересов всех участников межбюджетных отношений;

• самостоятельность бюджетов всех уровней;

• законодательное разграничение расходных полномочий и доходных источников между бюджетами всех уровней;

• объективное перераспределение средств между бюджетами для выравнивания уровня бюджетной обеспеченности регионов и муниципальных образований;

• единство бюджетной системы;

• равенство всех бюджетов РФ.

Межбюджетные отношения регулируются. Бюджетное регулирование — это процесс распределения доходов и перераспределения средств между бюджетами разных уровней в целях выравнивания доходной части бюджетов, осуществляемый с учетом государственных минимальных социальных стандартов. Бюджетный кодекс РФ четко разграничил доходы и расходы по бюджетам различных уровней. Доходы бюджетов можно разделить на две группы:

• собственные доходы бюджетов — доходы, закрепленные на постоянной основе полностью или частично за соответствующими бюджетами;

• регулирующие доход — федеральные и региональные налоги и платежи, по которым устанавливаются нормативы отчислений в процентах в бюджеты субъектов РФ или местные бюджеты на очередной финансовый год, а также на долговременной основе (не менее чем на 3 года). Нормативы отчислений определяются законом о бюджете того уровня, который передает регулирующие доходы.

Одним из методов бюджетного регулирования является оказание прямой финансовой помощи из вышестоящего бюджета нижестоящему. Формы оказания прямой финансовой поддержки: субвенции, дотации, субсидии, кредиты, ссуды. Субвенция — фиксированный объем государственных средств, выделяемых на безвозмездной и безвозвратной основе для целевого финансирования расходов бюджетов. Субвенция имеет две особенности. Во-первых, она используется в течение оговоренного срока, при просрочке субвенция подлежит возврату предоставившему ее органу. Во-вторых, ее используют для выполнения конкретных целей. Дотация выдается единовременно и без целевого назначения в случаях, когда закрепленных и регулирующих доходов недостаточно для покрытия текущих расходов. Субсидия — бюджетные средства, предоставляемые бюджету другого уровня, физическому или юридическому лицу на условиях долевого финансирования целевых расходов. Бюджетный кредит — форма финансирования бюджетных расходов, которая предусматривает предоставление средств юридическим лицам на возвратной и возмездной основе. Бюджетная ссуда — бюджетные средства, предоставляемые другому бюджету на возвратной, безвозмездной или возмездной основе на срок не более 6 месяцев в пределах финансового года. В 1994 г. в России был введен новый механизм межбюджетных отношений. Был создан Федеральный фонд поддержки регионов (ФФПР) за счет отчислений части НДС, поступающей в федеральный бюджет. Регионы получают из этого фонда трансферты (перевод средств в бюджеты нижестоящего территориального уровня из фонда поддержки регионов). Регионы делились на три группы, с выделением нуждающихся и особо нуждающихся регионов.

18. Derivative financial instruments.

Futures = standardized contracts (what assers, quantity, etc) => traded on stock exchange

Forwards = non-standardized future contract

SWAP = exchange of 2 possible cash flows

Options = (CALL, PUT). US Option – at any moment, European Option – at a particular date.

1. Introduction

A derivative instrument (or simply derivative) is a financial instrument which derives its value from the value of some other financial instrument or variable.ⁱ

Derivatives can be based on different types of assets such as commodities, equities (stocks), bonds, interest rates, exchange rates, or indexes (such as a stock market index, consumer price index, etc.) Performance of these indices can determine both the amount and the timing of the pay-offs.

• The main use of derivative contracts is to reduce risk for one party or for both parties entering a derivative contract. derivatives are an efficient and universal means of risk-minimization and effective resource allocation. They help to reduce practically all kinds of financial risks –

• inflation risks,

• currency risks,

• interest rate risks,

• market risks,

• risk of commodities supply, etc

However, the practice shows that they are also widely used for speculative trading. Speculators may trade with other speculators as well as with hedgers. In most financial derivatives markets, the value of speculative trading is far higher than the value of hedge trading used for risk minimization purposes.

2. Classification of derivatives.