Практический курс английского языка = Practical Course of English for Students of Economics. Учебное пособие для студентов экономических специальносте

surprising that over half of all clearing bank deposits are still current account deposits on which the banks pay no interest, and in fact on which they often levy charges to meet the expenses of servicing the account.

In the U.S. there are three main types of deposits. Demand deposits are similar to current accounts. They are more commonly known as checking accounts because they are sums standing to the credit of the customer which the bank undertakes to make immediately available to meet checks drawn against them, or of course as cash across the counter. They are the principal means of making payments.

Savings deposits generally are in small dollar amounts; they bear a relatively low-interest rate but may be withdrawn by the depositor with little or no notice. These deposits are designed to attract funds from customers who wish to set aside monies in anticipation of future expenditures. While their interest cost is higher, thrift deposits are generally less costly for a bank to process or manage. Passbook savings deposits and statement savings deposits are the main types of saving plans. Passbook savings deposits are sold to household customers in small denominations. The customers are given small booklets showing current balances in the account, any interest earnings, deposits and withdrawals. Usually a passbook must be presented by a depositor to a bank teller in order to make deposits or withdrawals. Statement savings deposits are evidenced only by computer entry. The customer can get monthly computer printouts showing all the relevant information.

Time deposits carry a fixed maturity and offer the highest interest rates a bank can pay. Time deposits may be divided into nonnegotiable certificates of deposit (CDs), which are usually small, consumer-type accounts, and negotiable CDs, that may be traded in the open market and are purchased mainly by corporations.

New forms or checkable (demand) deposits appeared, combining the essential features of both demand and savings deposits. These transaction accounts include negotiable orders of withdrawal (NOWs) and automatic transfer services (ATS). NOW accounts may be drafted to pay bills but also earn interest, while ATS is a preauthorized payments service in which the bank transfers funds from an interest-bearing savings account to a checking account as necessary to cover checks written by the customer. Two relatively new transaction accounts—money market deposits accounts (MMDAs) and Super NOWs—were offered. MMDAs, designed to compete directly with the high-yielding share accounts offered by money market mutual funds, and Super NOWs may carry prevailing market rates on short-term liquid funds. Both can be drafted by check, automatic withdrawal, or telephone transfer, but the number of permissible withdrawals from MMDAs is limited. MMDAs

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may be held by an individual, business firm, or unit of government, but Super NOWs can be held only by individuals, governments, and nonprofit organizations.

Each of the different types of deposits carries a different rate of interest or yield to the depositor. In general, the longer the maturity of a deposit, the greater the yield that must be offered. For example, NOW deposits and MMDAs are subject to immediate withdrawal by the customer and, accordingly, their offer rate to bank customers is among the lowest of all deposits. In contrast negotiable CDs and deposits of a year or longer to maturity often carry rates higher by a full percentage point or more. The size and perceived risk exposure of the offering banks also play an important role in shaping deposit interest rates.

1.Why are deposits so important?

2.What are the advantages and disadvantages of the current account from the point of view of a bank customer?

3.What are the main types of deposits in the U.S.?

4.Why are demand deposits often referred to as checking accounts?

5.What do checking accounts in the U.S. and current accounts in Great Britain have in common and in what do they differ?

6.What is the difference between the two main forms of savings deposits in the U.S.?

7.Do all the deposits sold by American banks carry the same yield?

8.What are the factors that influence the shaping of deposit interest rates?

Text 3

Read the text and identify the problem discussed in the text. Be ready to answer the questions given below.

Plastic Money. Cash Cards and Credit Cards.

Plastic money is the name given to all types of plastic card which are used in place of cash. There are different names for these cards but in general they have two main purpose: to enable people to obtain cash; or to make payments without using cash or cheques.

Banks now make available to their customers a single card which does three things: it guarantees cheques (like a bank card or cheque guarantee card); it obtains cash from automatic teller machines (ATMs); and it pays for goods by electronic funds transfer at point of sale (EFTPOS).

A fourth use for plastic cards is to give customers credit when they purchase goods or services. Credit cards are issued by credit card companies such as Access, Mastercard, Visa, American Express. Some of

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these are owned by banks. Charge cards (American Express, Diner’s Club) are similar to credit cards except that the holder has to pay the account in full each month and there is also an annual membership fee.

Debit cards are like credit cards except that they are used to debit (subtract) money to the customer’s bank account when a purchase is made. An existing credit balance is reduced. But when a credit card is used, a debit balance is increased.

The latest development in plastic money is the Smart Card. This carries a microchip on it with account information on the holder. It can also carry information about previous transactions which can be viewed at enquiry terminals. Clearly such a card could also be used to carry nonbanking information, such as medical and other personal details.

Cash dispenser, automatic teller machine or cashpoint are some of the names given to machines from which customers can withdraw money from their bank accounts, using their cash cards. They can do this at any branch of their bank and the branches of other banks which are linked to their bank.( Note: In the USA, the teller is a person receiving and handing out money in a bank. This occupation is called cashier in Britain.)

With the cash card, customers also receive a PIN or personal identification number which they should memorize. This number is kept secret even from the staff of their branch. When using the dispenser, customers insert the card and key the PIN number in. By following a clear set of instructions which appear on the video screen, they can withdraw cash up to a certain limit, check the balance of their account or deposit money.

Not all banks provide the same automatic teller services. Examples of services available from customers’ own branch machines are account information, orders for new cheque books and deposits of cheques and cash. Own-branch machines may also issue mini-statements of account, showing deposits just made and the current balance.

When you buy something you show your credit card to the seller. The seller takes the details of your card number, the credit limit and the expiry date. You sign the seller’s voucher (making two copies) which he uses to collect payment from the credit card company. For this service the retailer pays a fee (around 4 per cent of the value of the transaction). Each month the credit card company sends the cardholder an account which lists that month’s transactions and interest charges. EFTPOS is exactly what it stands for: Electronic Funds Transfer at Point of Sale. The cost of goods is transferred electronically at the point of sale from the customer’s bank to the seller’s bank. The print of sale is at the supermarket or petrol station where customers use their plastic cards to pay for goods. The sales person swipes (passes) the card through a card

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reader which reads the information on the magnetic strip on the back of the card.

The card reader enables the cash terminal computer to send the customer’s details via telephone wires to a Central Switch. The card details are encoded for security. The Central Switch selects the correct bank and sends the card details to the customer’s bank’s processor which checks the following information: card issue number, if the card has been reported stolen, the expiry date of the card, the value of the purchase, if there enough money in the customer’s account and the retailer’s identification number.

If everything is in order, the customer’s bank’s processor sends a coded authorization to the Central Switch which sends the message to the shop. The shop’s terminal confirms the payment, issues a receipt for the customer to sign and the customer can take the goods away. At the same time the Central Switch transmits the value of the transaction to the shop’s bank. If the payment is not authorized the customer has to find another way to pay for the goods.

After three days the customer’s bank debits the value of the purchase to his or her account. Meanwhile, also after three days, the shop’s bank credits the shop’s account with the value of the goods.

1.What sort of card would a bank account holder use to obtain money when the banks are closed?

2.What sort of card is used to pay for goods in a supermarket or petrol station without cash, cheque book or credit card?

3.What sort of card would a shop ask for if its customer wanted to pay for goods by cheque?

Text 4

Read the text and explain the meaning of the words in bold type. Be ready to answer the questions given below.

The Bill of Exchange – an Instrument of Short-term Export Credit

Shipping on open account, documentary letters of credit and documentary collections are the methods by which banks facilitate payment. We could also say that the banks supervise the transfer of money from importers to exporters against the transfer of goods or services from exporters to importers. They can do this, and facilitate short-term credit (up to six months) at the same time, by using a medieval Italian invention – the Bill of Exchange.

The Bill or draft may be drawn on the importers or a bank. The drawee (usually the bank which issued the credit) accepts the Bill against correct documents. But whoever the drawee is, the value of the Bill is guaran-

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teed if it is accepted by a well-known bank. This means that that bank will honor it when the Bill matures and take on the risk and work of collecting payment plus the commission from the importers. The fact that the Bill has a life or tenor of one or more months means that the importers get credit for that period of time. At the same time the exporters may obtain their money by selling the Bill on the discount market. The buyer discounts it by paying the face value minus the discount which is the interest on the Bill for the remainder of its life. At maturity, the holder presents the Bill to the accepting house for payment. The interest is determined partly by the status of the accepting house (bank) and partly on the interest rates prevailing in the discount market at the time. A firstclass name means a lower rate, and a less well-known name produces a higher rate. The higher the rate the greater the discount and the less the value of the Bill in the market. Conversely, the better known the accepting house, the finer the rate and the smaller the discount. However the exporters have to cost the discount into the total price of the export contract. Banks can also provide short-term export finance by means of overdrafts or loans to the exporters. The kind of security taken by the bank may vary. The bank might even provide unsecured finance for an established customer.

But from the point of view of the exporters, the problem with borrowing their own national currency from their bank is that, by the time they are paid by the importers, the value of the currency they are paid in may have gone down. So they might receive less than the original price when they come to change it into their own currency. They can overcome this problem by taking out the loan in a foreign currency. Another possibility is to take out insurance against the risk of an adverse change in the exchange rate. Leads and lags are early and late payments by importers. Leads occur when importers decide to pay for goods earlier than the end of the credit period, if they think the cost of their payment currency is going to rise in terms of their own currency. Lags happen when importers delay payment because the price of the payment currency is falling. The later they pay, the less it will be in their own currency.

Factoring services are available to UK exporters for credit periods of up to 120 days. Clearly the banking system is still used, as with all forms of payment, and the status of the debtors (importers) and the debtors’ country is most important. Export credit may also be provided by nonbank institutions. Export Merchants buy from exporters and become the exporters themselves. This eliminates the exchange risk for the producer and reduces the credit period. Export agents act as independent export departments for the exporter. They do the work of exporting but do not take any financial responsibility. Confirming houses are agents of im-

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porters. They also eliminate the exchange risk for the exporter and reduce the credit period. They may open or confirm documentary letters of credit on behalf of the importers and offer longer periods of credit. They are paid interest for credit periods and commission by the importers.

1.What is the Bill of Exchange?

2.What is exchange risk?

3.What is the exchange rate?

4.What is the discount market?

5.What is a confirming house?

6.What are Documentary Letters of Credit?

7.What are export merchants?

8.What are leads and lags?

Text 5

Read the text and see if the writer’s ideas are the same as yours. Be ready to answer the questions given below.

Mediumand long-term export finance – supplier credit

Documentary Letters of Credit and Documentary Collections are methods of payment in international trade used with Bills of Exchange for short-term credit (up to 6 months). But export finance is needed to provide money for longer periods of credit – for large-scale engineering and building projects, for machinery and installations supplied over several years. The aim is still the same – to provide money for the exporters and to get it back later from the importers – only the amounts of money are greater and the periods of credit longer: 6 months to 2 years (me- dium-term) and up to 5 years or even longer (long-term).

From this it can be seen that the size of the risk is often too great for one bank to take on. This is why all the various techniques of export finance such as forfeiting export insurance, leasing and lease purchase have been developed. Also, financial institutions besides individual banks are involved. For instance export insurance is provided by the Export Credits Guarantee Department (ECGD) in the UK for long-term contracts and by the Dutch company NCM for contracts up to 2 years. Some projects are syndicated by a consortium of banks and leasing is provided by subsidiary finance companies of banks. The ECGD is a government department set up in 1919 on a commercial basis, to protect exporters from buyer default and political risk. It has a database of over 200.000 credit ratings on importers around the world. The insurance is in the form of guarantees to banks.

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These guarantees may be given either to the supplier or the buyer. If the suppliers (exporters) have a credit guarantee they receive payment from their bank as soon as they have shipped the goods, or handed over the factory in working order, according to agreement. There is no risk for them as long as they carry out the contract according to the terms of the agreement. Their bank has a guarantee from the ECGD or NCM and will not therefore have recourse to them.

When the ECGD or NCM provides a guarantee of buyer credit, the bank also receives the money to pay the exporters. In addition it has promissory notes or acceptance bills as collateral security from the buyer. If these are not paid when they mature/ the insurers (i.e. the ECGD or NCM) pay. The main advantage of this from the suppliers’ point of view is that they are freed from all recourse problems, as long as they carry out the contract.

Leasing and lease purchase are methods of finance operated by finance company subsidiaries of banks, which work rather like buying a car or house. Leasing is a form of renting while lease purchasing is a form of buying. They are both used to finance major capital assets which have a long life, such as factories and other business premises.

As soon as the plant is set up and in working order the exporters get paid and the importers get immediate use of it. Part of the total price comes from the importers and the rest is provided by the finance company. The importers agree to pay the balance in installments. The bank may be in the importers’ country. If it is in the exporters’ country, the operation is known as cross border leasing.

As with export insurance, the big advantage of leasing to the exporters of leasing is that there is no recourse to them in the case of buyer default.

1.Are Documentary Letters of Credit a method of payment or a method of finance?

2.Are Bills of Exchange a method of payment or a method of finance?

3.Does The Export Credit Guarantee Department provide export insurance or guarantees?

4.Large projects are often too big to be financed by one bank, aren’t

they?

5.Who can be given the guarantees the supplier or the buyer?

;Language

1.Practise reading the following words correctly. If necessary, use the dictionary.

Guarantee, default, leasing, consortium, merchant, maturity, adverse change, dispenser, personal identification number, cashier, cheque, voucher, enquiry.

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2. Give the Russian equivalents for the following words and phrases:

Financial institution, commercial bank, global business environment, market-driven strategies, competitive pressure, demand deposits, floating-rate deposits, fluctuating economy, cashing checks, automated teller machine, retail store point-of-sale (POS) terminals, correspondent banking, borrowings, obligations, maturity, trustee, trustor, mortgage loans, overdrafts, interest-earning deposits, savings deposits, nonnegotiable certificates of deposit, automated withdrawal, telephone transfer, overdrafts, loans, security, unsecured finance, exchange risk, adverse charge, exchange rate, leads and lags, factoring services, export merchants, eliminates the exchange risk, export agents, confirming houses, Short-term export finance, merchant bank, accommodation finance, trade bill, accommodation bill, acceptance bill, accepting house, the discount market, obtain payment, export order.

3.Fill in the blanks with the pronouns some, any, no, other, another and the other:

1.Are there … commercial banks in your town? Yes, there are. 2. Is there … money in your savings account? No, there isn’t … . 3. Does a credit union lend … money to its members? Yes, it does. It lends … money to its members. 4. Do pension funds invest … money into the industry? No, they don’t. They invest … money into the industry. 5. There are

…commercial finance companies that provide collateralized loans to businesses. 6. Our company lets the bank handle the financing while … companies have their own financial people on the staff. 7. Big businesses prefer long, term. financing while small companies prefer … short-term financing. 8. Commercial bank … of the financial institutions that provide loans for … financial institutes that serve businesses in savings and loan association.

4.Fill in the blanks with many, much, little, a little, few and a few where necessary:

1.… insurance companies protect their customers against risk. 2. It takes one … money to join a credit union. 3. Starting a business without financial support from the bank may cause you … trouble. 4. Banks in the USA are subject to … government regulations. 5. Savings and Loan Associations attract … small savers who do not want to have any risk. 6. Only … major customers can keep up with the rise of the service prices. 7. No matter how … money you have you can open a bank account. 8. Very … financial institutions nowadays keep off technical innovations in the banking industry. 9. You can’t do without … cash on hand when you go to a retailer shop.

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5. Put the verb in brackets into the right tense form:

1. Large commercial banks (install) automatic teller machines nowadays. 2. Customers usually (use) their debit cards to transfer money from their checking account to the merchant’s account. 3. As a rule a customer (pay) a fee of forty cents for each transaction outside the state. 4. Financial supermarkets (appear) all over the USA these days. 5. The customers often (look) around for the highest return on their savings or the lowest rate they can get on a loan. 6. Small banks now (compete) with larger banks by finding a special need and meeting it. 7. Small banks often (develop) strong ties with businesses and the general public in their own geographic area. 8. The Fed (lend) money to member banks. 9. Member banks (obtain) money from the district reserve banks. 10. The Federal Reserve System (receive) paper securities from the dealers that (receive) cash in return. 11. The Fed (buy) the government securities and (increase) the money supply. 12. Banks (keep) 20 percent of all the funds on deposit. 13. Our firm (extend) its resources through the use of credit next fiscal year. 14. I (invest) some more of other people’s money next winter to expand my business. 15. The firm (secure) the mortgage by its building and equipment when it decides to do so.

6. Change direct speech into indirect speech:

1. The retailer said, ‘You can buy machinery and tools on an open account.’ 2. The customer said, ‘I bought a new car at your shop and it needs repair.’ 3. The banker said, ‘I am opening a credit account for you.’ 4. The businessman said, ‘As a rule, we sell our goods abroad.’ 5. The manager said, ‘We haven’t raised enough money to expand.’ 6. The wholesaler said, ‘I sold a large amount of tools to retailer shops but they are not paying me in due time.’ 7. The manager asked, ‘Does this project require long term financing?’ 8. The director asked, ‘Are we repaying debts in due time?’ 9. The lender asked, ‘Have you found any collateral to back up the loan with?’ 10. He asked, ‘Did this debt carry interest?’ 11. The head of the company asked the Board of Directors, ‘Are we able to repay the loan?’ 12. The manager asked the customer, ‘Can you wait a little longer?’ 13. The borrower asked, ‘Do you require that we obtain your permission before taking on another loan?’ 14. The bondholder asked, ‘Is the bond a secured one?’ 15. The businessman asked, ‘Have you used debentures in recent years?’ 16. The customer asked, ‘Were the terms specified in any agreement?’ 17. The manager asked, ‘Is this really an accurate assumption?’ 18. He asked, ‘Do you pay dividends quarterly or annually?’ 19. We asked, ‘Did the investors prefer common stock?’

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7. Fill in the blanks with the verbs can, may, must, have to, and need where necessary:

1.The businessman … use the money which his friends offer to him.

2.We do not … an installment loan. We have enough personal assets.

3.My business went bankrupt, so I … sell my home to pay debts. 4. … I obtain a loan from your venture capital firm? 5. We … apply for more cash yesterday because we ran out of money. 6. The venture capital firm … lend you about $20,000 to start your business with. 7. The company doesn’t … additional cash. It receives high revenue. 8. The lender … become a shareholder in a corporation. 9. You … not exceed the cash surrender value when you borrow from the insurance company.

8.A. Using suffixes -er, -or, -ier, -ent, -ial, etc., give nouns which are

related to the following:

Bank, invest, cash, manage, direct, office, deposit, own, execute, work, hold.

B.Using suffixes -al, -able, -ory, -ive, etc., give adjectives which are

related to the following verbs:

Change, profits, control, sell, desire, speculate, negotiate, transfer, pay, value.

C.Using prefixes il-, im-, in-, ir-, un-, non-, dis-, etc., give negative

adjectives which are related to the following:

Expensive, negotiable, regular, important, orderly, specified, legal, payable, stable, matured, proper, sufficient, movable, profitable, transferable, active, licensed, listed, cleared, direct, endorsed, honoured.

9. Complete the sentences using the correct forms of the verbs given below.

1.The retailer the card through a card reader at a terminal. 2. The information is …before being sent via the telephone system to ensure its security. 3. The Central Switch . .. the right bank. 4. After being paid by credit card, the retailer has to … payment from the credit card company.

5.The different systems have to … payment to the seller. 6. The cardholder’s bank’s computer … the information it receives. 7. If everything is acceptable the computer … payment to the Central Switch. 8. The display on the terminal … payment. 9. A cardholder should … the loss of a card to the company immediately. 10. The manager of my bank has been …to another branch.

10.Match the words on the left with the words of the same meaning on the right.

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