Каирсапова Сборник дополнителных 2014

the era when unrestricted movement of capital was taken as a desirable norm around the world.

It wasn’t always thus. In the first couple of decades after World War II, limits on cross-border money flows were widely considered good policy; they were more or less universal in poorer nations, and present in a majority of richer countries too. Britain, for example, limited overseas investments by its residents until 1979; other advanced countries maintained restrictions into the 1980s. Even the United States briefly limited capital outflows during the 1960s.

Over time, however, these restrictions fell out of fashion. To some extent this reflected the fact that capital controls have potential costs: they impose extra burdens of paperwork, they make business operations more difficult, and conventional economic analysis says that they should have a negative impact on growth (although this effect is hard to find in the numbers). But it also reflected the rise of free-market ideology, the assumption that if financial markets want to move money across borders, there must be a good reason, and bureaucrats shouldn’t stand in their way.

As a result, countries that did step in to limit capital flows — like Malaysia, which imposed what amounted to a curfew on capital flight in 1998 — were treated almost as pariahs. Surely they would be punished for defying the gods of the market!

But the truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment.

It’s hard to imagine now, but for more than three decades after World War II financial crises of the kind we’ve lately become so familiar with hardly ever happened. Since 1980, however, the roster has been impressive: Mexico, Brazil, Argentina and Chile in 1982. Sweden and Finland in 1991. Mexico again in 1995. Thailand, Malaysia, Indonesia and Korea in 1998. Argentina again in 2002. And, of course, the more recent run of disasters: Iceland, Ireland, Greece, Portugal, Spain, Italy, Cyprus.

What’s the common theme in these episodes? Conventional wisdom blames fiscal profligacy — but in this whole list, that story fits only one country, Greece. Runaway bankers are a better story; they played a role in a number of these crises, from Chile to Sweden to Cyprus. But the best predictor of crisis is large inflows of foreign money: in all but a

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couple of the cases I just mentioned, the foundation for crisis was laid by a rush of foreign investors into a country, followed by a sudden rush out.

I am, of course, not the first person to notice the correlation between the freeing up of global capital and the proliferation of financial crises; Harvard’s Dani Rodrik began banging this drum back in the 1990s. Until recently, however, it was possible to argue that the crisis problem was restricted to poorer nations, that wealthy economies were somehow immune to being whipsawed by love-’em-and-leave-’em global investors. That was a comforting thought — but Europe’s travails demonstrate that it was wishful thinking.

And it’s not just Europe. In the last decade America, too, experienced a huge housing bubble fed by foreign money, followed by a nasty hangover after the bubble burst. The damage was mitigated by the fact that we borrowed in our own currency, but it’s still our worst crisis since the 1930s.

Now what? I don’t expect to see a wholesale, sudden rejection of the idea that money should be free to go wherever it wants, whenever it wants. There may well, however, be a process of erosion, as governments intervene to limit both the pace at which money comes in and the rate at which it goes out. Global capitalism is, arguably, on track to become substantially less global.

And that’s O.K. Right now, the bad old days when it wasn’t that easy to move lots of money across borders are looking pretty good.

Are the following sentences true or false?

1.Controlling the movement of capital will mark the end of an era for Cyprus which has been advertising itself as a place with high taxes.

2.Capital controls impose extra burdens of paperwork, making business operations more difficult and having a positive impact on growth.

3.Free capital flow looks like a successful experiment.

4.Foreign investors, rushing into the country and then suddenly rushing out, prevent the crisis.

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Present your ideas how to avoid the crises

Refer back to the article and write a summary of the article

№2

Read the following text, which is taken from an annual report of one of the world's largest banks

Translate this text from English into Russian Then choose the best heading from this list:

The year in brief Financial review

Global banking resources Notes to the accounts Foreign locations

To service the needs of different client groups effectively, the Bank is organized into three broad groups: the Domestic Banking Group, the Corporate Banking Group and the International Banking Group.

The basis of the Bank's strength continues to be its domestic banking operations. The Domestic Banking Group's network of 295 branches provides a full range of banking services nationwide and is the largest network in the country.

The Corporate Banking Group is responsible for servicing the complex needs of over 200 of the nation's largest corporations. Of the Bank's total domestic deposits and domestic loans outstanding, the Corporate Banking Group accounts for 25 per cent and 40 per cent respectively.

The Bank continues to develop and expand its international operations, and in fiscal 1991 foreign earnings surpassed those of the country's other leading banks for the fourth consecutive year. Since January 1 1990, the Bank has opened six new representative offices and has upgraded the Rome representative office into a full service branch. Our strong international presence is currently maintained through 12 branches, 18 representative offices, two agencies and 10 subsidiaries and affiliates.

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The International Banking Group includes regional departments which assume responsibility as follows: the Americas; Africa, Middle East and Europe; Asia and Oceania. The Group includes both the Correspondent Banking Department, which is responsible for the Bank's correspondent banking network of some 1,500 institutions, and the Merchant Banking Department.

Also within this Group, the International Treasury Department specializes in foreign exchange and funding operations, while the International Planning Department is responsible for strategic planning. The International Business Supervision Department is responsible for the assessment of country risk and corporate credits, as well as for systems development and for ensuring compliance with regulations regarding international business.

The Bank continues to respond well to market dynamics both at home and abroad. Part of the Bank's strength lies in the wide spread of its representation and in its ability to develop sophisticated new services to meet the changing patterns in banking opportunities. The Bank's aim is to ensure the continued prosperity of the group by means of its dedication to service and by expanding the scope of its activities, both geographically and functionally. We believe that we have the right organization to do this in the period ahead.

№3

Translate the following text from English into Russian in writing.

History of Accounting

Accounting is a system of recording and summarizing business and financial transactions. For as long as civilization has been engaging in trade, methods of record keeping, accounting , and accounting tools have been invented. Marla Matzer Rose, author of Accounting & Auditing History writes that the earliest known writing discovered by archaeologists has, when translated, been found to be records of tax accounting . Such writings have been found on clay tablets from Egypt and Mesopotamia from as early as 2000 to 3300 B.C., as humans formed governments, accounting became a necessity.

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The history of accounting is as old as civilization, key to important phases of history , among the most important professions in economics and business, and fascinating. Accountants participated in the development of cities, trade, and the concepts of wealth and numbers. Accountants invented writing, participated in the development of money and banking, invented double entry bookkeeping that fueled the Italian Renaissance, saved many Industrial Revolution inventors and entrepreneurs from bankruptcy, helped develop the confidence in capital markets necessary for western capitalism, and are central to the information revolution that is transforming the global economy.

Accounting history is summarized in eight chapters. An overview places accounting in perspective. In some ways accounting hasn't changed much since Pacioli wrote the first "textbook" in 1494. On the other hand, accounting has been a leader of the Information Revolution. Many aspects of 21st century accounting will be unrecognizable by today's professional leaders. Understanding the role of financial and managerial needs today and in the future requires an understanding of the past.

№4

Translate the following sentences from Russian into English in writing

1.В последние два десятилетия движение денег и товаров между странами стабильно растет.

2.Теоретически правительства могут свободно определять свою собственную экономическую политику, на практике же они должны соответствовать глобальной экономической модели.

3.Другие факторы, способствовавшие росту глобализации,- новые коммуникационные технологии и усовершенствованные системы транспорта.

4.В экономических странах, особенно в Европейском союзе, глобализация встречает широкое сопротивление.

5.Противники глобализации считают, что без защиты торговых барьеров рабочие в слаборазвитых странах мало оплачиваются и эксплуатируются, кроме того, и в развитых странах заработная плата рабочих падает.

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Unit 3

№1

Read the following article

Translate this article from English into Russian

Match these titles to the abstracts from article:

1.Comparing poor and rich unbanked people

2.How bank accounts made money before the crisis

3.Using pre-paid cards

4.Statistics of loans

5.Offering basic accounts

6.“Underbanked” households

7.Regulators made it harder for retail banks to serve low-income Americans

8.The largest retailer

9."Unbanked" households

Finance and the American poor Margin calls

Life on the edges of America’s financial mainstream

ONLY one thing is worse than the financial industry dangling inappropriate products in front of poor customers, and that is not providing them with financial services at all. In December the Federal Deposit Insurance Corporation (FDIC) released a survey that found roughly one in 12 American households, or some 17m adults, are “unbanked”, meaning they lack a current or savings account.

The survey also found that one in every five American households is “underbanked”, meaning that they have a bank account but also rely on alternative services—typically, high-cost products such as payday loans, cheque-cashing services, non-bank money orders or pawn shops.

Not all the unbanked are poor, nor do all poor people lack bank accounts. But the rate of the unbanked among low-income households (defined in the FDIC survey as those with an annual income below $15,000) is more than three times the overall rate. The proportion of poor Americans without an account compares particularly badly with other rich places (see chart). The unbanked usually have no alternative

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but to use cash for all their transactions. Without an account to put paycheques into, they have to use cheque-cashers. This does not just mean incurring a fee; carrying large amounts of cash also increases the risk and harm of theft. To pay their utility bills the unbanked need either a non-bank money order, for which they have to pay a fee, or a place that accepts utility payments in cash.

When they need credit, the unbanked turn to payday lenders or, if they have a car, to car-title loans secured by their vehicles. Payday lenders say that high volumes—estimated at $29.8 billion for storefront payday lenders and $14.3 billion for online lenders in 2012— demonstrate high demand. Critics retort that much of that volume comes not from a broad customer base, but from customers taking out additional loans to cover the original debt. A study by the Centre for Financial Services Innovation, a non-profit organisation, found that the average payday customer takes out 11 loans a year; the annual interest rate can exceed 400%. Lawmakers are taking an increasingly dim view of this: 18 states and the District of Columbia outlaw high-rate payday lending. The nascent Consumer Financial Protection Bureau (CFPB) has held a public hearing on the subject, boosting speculation that the federal government may start regulating payday lending.

Clamping down on payday loans would make more sense if regulators had not made it harder for retail banks to serve low-income Americans. The Durbin amendment—passed as part of the Dodd-Frank act in July 2010—capped interchange fees, the commission that merchants pay, on debit cards. One year earlier Congress passed the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act), which reduced interest-rate increases and late fees on credit cards. The CFPB is also looking at overdraft fees. Add in persistently low interest rates, which have eaten into banks’ net interest margins, and the economics of banking the poor is far less attractive than it was.

Michael Poulos of Oliver Wyman, a consultancy, says that “before the crisis, almost every bank account made money. Big accounts made money on the spread, and small accounts made money on incident fees. You made money on all the accounts with interchange fees. All of that is either severely curtailed or completely gone.” Oliver Wyman reckons that US banks now lose money on 37% of consumer accounts.

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For those concerned that their low net worth bars them from the banking system, there are two reasons for hope. The first is that lenders and credit bureaus are starting to use a broader range of data to determine the creditworthiness of prospective borrowers. Many of the unbanked have no credit histories. But data from rent, mobile-phone and utility bills give lenders a way to find lower-risk borrowers.

The second reason for optimism is an increasingly competitive market in pre-paid cards. Once simply reloadable proxies for cash, many of these cards now offer much the same features as bank accounts.

Consider the Bluebird card, a joint venture between Walmart, America’s largest but decidedly downmarket retailer, and American Express, a decidedly upmarket credit-card firm. Among other things, Bluebird offers direct-deposit facilities (including an option where you can take a picture of a pay-cheque with your smartphone) and fee-free sub-accounts (so that a parent can give a child a card with preset spending limits). Pre-paid cards are not perfect: their fees can be sizeable and opaque, and they offer limited consumer protection. But they are convenient and a growing part of America’s consumer-finance landscape.

The share of unbanked households using pre-paid cards rose from 12.2% in 2009 to 17.8% in 2011. The Mercator Advisory Group forecasts a compound annual growth rate of 21% for the pre-paid card market to 2015, by when it expects the total dollar amount Americans load onto cards to be around $390 billion, more than ten times as much as in 2006.

The banks may yet follow suit. Michael Barr of the University of Michigan suggests that big banks should start offering basic accounts— offering electronic payments rather than cheque-writing, for instance— that operate with either pre-paid cards or debit cards. Overdraft-proofing the debit cards and eliminating paper cheques would reduce cost and risk. Such accounts may offer banks only modest revenue, but that is still better than none.

Are the following sentences true or false?

1. "Unbanked" households have a bank account but also rely on alternative services.

2.The average payday customer takes out 12 loans a year.

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3.The Durbin amendment capped interchange fees, the commission that merchants pay, on debit cards

4.Before the crisis you made money on all the accounts with interchange fees .

Refer back to the article and write a summary of the article

№2

Read the following text

Translate this text from English into Russian

Caveat creditor

A new economic era is dawning

SOMETIMES you can have too much news. There was so much financial turmoil in the autumn that it was hard to keep up with events. In retrospect it is clear that a change in the economic backdrop akin to the demise of the Bretton Woods system in the early 1970s has taken place. Investors will be dealing with the aftermath for decades to come.

From the mid-1980s onwards the answer to big financial setbacks appeared to be simple. Central banks would cut interest rates and, eventually, the stockmarket would recover. It worked after Black Monday (the day in October 1987 when the Dow Jones Industrial Average fell by 23%) and the Asian crisis of 1997-98. It did not rescue shares after the dotcom bust but the easing led to the housing boom and the underpricing of risk in credit markets.

Easing monetary policy was pretty popular. It lowered borrowing costs for companies and homebuyers. To the extent that savers earned lower returns on their deposit accounts, they were usually compensated by a rebound in the value of their equity holdings.

Indeed, monetary easing appeared to be costless. When policymakers cut interest rates in the 1960s and 1970s they often ignited inflationary pressures. Not so in the 1990s. Whether that was down to the brilliance of central banks or the deflationary pressures emanating from China and India is still a matter of debate.

This time around conventional monetary policy has not been enough. The authorities have also had to resort to quantitative easing, using the balance-sheets of central banks to ensure the funding of clearing banks

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