- •Предисловие
- •Unit 1. Economic environment a. Text what is economics all about?
- •B. Dialogue business climate in russia
- •Vocabulary list
- •Exercises
- •Discussion
- •In order to get prepared for participation in the class discussion of the above questions, write several paragraphs on the following:
- •Reading practice
- •Unit 2. Public finance a. Text finance and financial system
- •B. Dialogue budget organization and budget process
- •Vocabulary list
- •Exercises
- •Discussion
- •A) The Budget Message of the Mayor
- •April 27, 1995
- •In order to get prepared for participation in the class discussion of these questions, write several paragraphs on the following:
- •Reading practice
- •Unit 3. Fiscal management a. Text financial policy. Fiscal sphere
- •B. Dialogue effective fiscal policy
- •Vocabulary list
- •Exercises
- •A) Financial Policy
- •B) Fiscal Policy in the uk
- •Discussion
- •A) Multiyear Budgeting
- •B) Types of Budget Classification
- •A) Fiscal Policy in Transition Economies: a Major Challenge
- •B) On Macro- and Microeconomics
- •In order to get prepared for participation in the discussion of the questions, write a short essay on the following:
- •Reading practice
- •Transition Economies Need to Reform Social Safety Nets
- •Unit 4. Central banking. Monetary policy a. Text central banking system
- •B. Dialogue banking system in russia
- •Vocabulary list
- •Exercises
- •Us Activities of Foreign Banking Organizations
- •Discussion
- •A) Is Monetary Policy Needed?
- •B) Payment Systems
- •In order to get prepared for participation in the class discussion of the questions, write a summary of the interview in Ex. 13. Follow the plan suggested below:
- •Reading pra ctice
- •Unit 5. Banking system a. Text commercial banks
- •B. Dialogue
- •Interview With a Bank Manager
- •Vocabulary list
- •Exercises
- •B) Bank Accounts
- •B) The Nature of Banking
- •Discussion
- •A) Bank Loans and Overdrafts
- •In order to get prepared for participation in the class discussion of the questions, write a short essay on:
- •Reading practice
- •Unit 6. Taxation a. Text what are taxes?
- •B. Dialogue taxation in russia
- •Vocabulary list
- •Exercises
- •What Is an Excise Duty?
- •Tax Reform in Developing Countries
- •Discussion
- •In order to get prepared for participation in the class discussion of the questions, write a short essay on the following:
- •Reading practice
- •Unit 7. International monetary system a. Text
- •International monetary institutions
- •B. Dialogue
- •Imf's support for russian reforms
- •Vocabulary list
- •Exercises
- •International Monetary Fund
- •Your Partner ebrd
- •World Bank – International Bank for Reconstruction and Development (ibrd)
- •Discussion
- •In order to get prepared for participation in the class discussion of the questions, write a short essay on:
- •Reading practice
- •Unit 8. Financial markets. The bond market a. Text trading in the bond market
- •B. Dialogue the bond market
- •Vocabulary list
- •Exercises
- •Discussion
- •In order to get prepared for participation in the class discussion of the above questions, write a short essay on the following:
- •Reading practice
- •Unit 9. Financial markets. The stock market a. Text stocks and markets
- •B. Dialogue the corporate securities market in russia
- •Vocabulary list
- •Exercises
- •Discussion
- •A) Bulls, Bears and Stags
- •B) Options and Short Selling
- •In order to get prepared for participation in the class discussion of the questions, write a short essay on the following:
- •Reading practice
- •The New Issue Market
- •Unit 10. Investment activity a. Text
- •Investments
- •B. Dialogue
- •Investment climate
- •Vocabulary list
- •Exercises
- •Investment Companies
- •3 Food Giants Build Local Yogurt Plants
- •Discussion
- •B) Brazil Attracts Foreign Investors
- •C) Investment in the uk
- •In order to get prepared for participation in the class discussion of the questions, write a short essay on the following:
- •Reading practice
- •Investment Skill Is a Rare Commodity
- •Investment Trusts
- •Unit 11. Foreign exchange market. Global financial markets a. Text trading in the foreign exchange market
- •B. Dialogue cornerstone of the global financial market
- •Vocabulary list
- •Exercises
- •The Eurocurrency Market
- •Discussion
- •In order to get prepared for participation in the class discussion of the questions, write several short paragraphs about:
- •Reading practice
- •Unit 12. Financial management a. Text finance function
- •B. Text financial ratios
- •C. Dialogue ratio analysis
- •Vocabulary list
- •Exercises
- •Discussion
- •A) Corporate Governance
- •B) Investment Management
- •A) Investment Decision Making
- •B) Investment Project Appraisal
- •In order to get prepared for participation in the class discussion of these questions, write a short paragraph on the following:
- •Reading practice
- •Unit 13. Accounting a. Text accounting principles and concepts
- •B. Dialogue accountancy in a free-market economy
- •C. Dialogue public and private accountants
- •Vocabulary list
- •Exercises
- •Discussion
- •In order to get prepared for participation in the class discussion of the questions, write a short paragraph, explaining:
- •Reading practice
- •Balance Sheet
- •A. Balance sheet
- •Unit 14. Auditing a. Text performing an audit
- •B. Dialogue auditing in russia
- •Vocabulary list
- •Exercises
- •Ex. 4. Say in a few words what the main text is about. Use the opening phrases from
- •Sweden.
- •Independent Auditors' Report to the Board of Directors and Stockholders of_______Company
- •Discussion
- •In order to get prepared for participation in the class discussion of the questions, write several paragraphs on the following:
- •Reading practice
- •Banking correspondence
- •Dictionary of key words
- •Contents
In order to get prepared for participation in the class discussion of the questions, write a summary of the interview in Ex. 13. Follow the plan suggested below:
1. The Hungarian stabilization program.
(Use: austerity, painful, controversial, not very popular, negative impact on living standards, spending cuts, privatization, FDI)
2. The measures taken.
(Use: to impose, exchange rate, taxation, to devalue)
3. The immediate results.
4. The situation with current-account deficit.
(Use: to be in line with, privatization, to meet the target, capital inflows, to cause problems, to succeed in reducing, open-market operations)
5. Operations of the Central Bank to find resources and stabilize the banking system.
6. Stock market.
(Use: to curb inflation, yields on government securities, membership, secondary market, rescheduling, maturity, spreads, to be confident)
7. Problems with the social security system.
(Use: to contain the deficit, to collect arrears, to owe)
8. Changes for the better in Hungary.
(Use: to deny, profitability, to do well, market forces)
Ex. 15. Prepare a short talk on the following:
a) The structure of the CBR (Bank of England, the Federal Reserve System), how it provides services to banks, stabilizes the banking system and shares in economic policy-making.
b) The monetary policy pursued in Russia at the present time.
c) Define money and list the assets used as money in different countries.
Ex. 16. Scan the foreign financial newspapers available to you and look for articles about banking in Russia and the role of the Central Bank. Present the information in class and comment on it.
Reading pra ctice
Ex. 17. a) Read the article quickly to find the answer to the following question: Why are serious banking problems inevitable in transition economies?
b) Reread the article more carefully and underline the parts where conditions for avoiding banking problems in transition economies are mentioned.
The number of countries experiencing significant banking problems has increased substantially in recent years. It should be stressed that the problems are hitting industrial and developing countries alike.
The problems arose from weaknesses and distortions in the banking systems and above all from the failure of the central banks to successfully fulfil their principal function of maintaining economic stability through a credible and responsible monetary policy.
Serious banking problems were almost inevitable in transition economies, because uncontrolled and unsupervised growth in commercial bank lending quickly unmasked hidden problems which brought about crises in many of the former centrally-planned economies.
Although the experiences of different countries differ according to each country's circumstances, the following general conclusions with regard to transition economies can be made:
• One of the most important conditions for avoiding serious banking crises is the pursuit of stable macroeconomic policies, which must be priority number one in transition economies.
• The transition process implies a dramatic change in the role and instruments of monetary policy. One cannot deny the fact that by the end of 1994, most countries in transition had shifted, to varying degrees, to market-oriented (indirect) instruments of monetary policy. For example, as a result of reforms in the monetary, exchange and banking areas, the CIS countries have achieved a market-based determination of interest rates.
• Competition in the banking system is important. Entry of foreign banks may offer a means to foster competition, but proliferation of banks is not necessarily a good thing in all countries. Some new banks may be weak and poorly managed. Systematic bank insolvencies have typically been a combination of poor lending decisions, inadequate licensing and supervision procedures. It is very costly and counterproductive to keep unhealthy banks alive. The lender-of-last-resort function involves net injections of liquidity into the economy and thus has a monetary impact that conflicts with the chief objective of monetary policy, that of maintaining stability and low inflation.
• Given the small size of the domestic monetary sector, the banking sector is highly sensitive to even minor changes in capital flows. Rapid and uncontrolled increases in banking assets should be discouraged. In some countries the cost of sterilizing capital inflows remains an issue.
Words you may need:
experience v испытывать, знать по опыту
hit v поражать, ударять
alike adv подобно, одинаково; в равной мере
credible adj заслуживающий доверия
responsible adj ответственный
inevitable adj неизбежный
unmask v (зд.) вскрывать
hidden adj скрытый
pursuit of stable macroeconomic policies проведение стабильной макроэкономической политики
one cannot deny нельзя отрицать
foster v поощрять, благоприятствовать
proliferation n распространение
insolvency n неплатежеспособность
licensing n лицензирование
conflict v входить в противоречие
sensitive adj восприимчивый, чувствительный
capital flows n финансовые потоки
sterilizing n стерилизация (предотвращение негативного воздействия притока капитала)
Ex. 18. a) Read the article to find the characteristics of a country's economic system that are taken into account when an exchange rate policy is determined.
b) Reread the article and find the options for an exchange rate policy different countries have these days. Say what they imply.
Exchange Rate Policy
Exchange rate policy involves choosing an exchange rate system and determining the particular rate at which foreign exchange transactions will take place. A country's exchange rate policy affects the overall level of domestic prices and its relative price structure in domestic currency terms between goods which are traded internationally (tradables) and goods which are produced for the domestic market (non-tradables or home goods).
A country's economic structure and its institutional characteristics are important considerations in determining exchange rate policy.
The following characteristics are usually taken into account:
• reliance on primary commodity production and exports (minerals and agricultural crops);
• dependence on essential imports (capital equipment);
• use of direct investment and official and private lending;
• development of financial markets, availability of experienced personnel, foreign exchange dealers in particular.
Countries have quite a number of options for exchange rate policy:
a. Peg to a single currency.
By pegging the value of a currency to that of a single currency the country facilitates its trade with the country whose currency is used as the peg. Besides, capital flows related to investment may be positively affected by the stability of the exchange rate. Moreover, pegging to a stable currency, like the US dollar, enhances the confidence in the pegging country's currency.
b. Peg to a basket of currencies.
An alternative approach is to peg the currency to a weighted average of several currency values or a basket of currencies. It helps to avoid large swings in its exchange rate with respect to several trading partners' currencies and enables countries to avoid some import price fluctuations. There are several disadvantages, however, of a basket peg. They are connected with technical difficulties of implementing a peg which would in general change on a daily basis vis-a-vis all of the industrial countries. The pegging country may lose attractiveness to foreign investors because there might be more uncertainty about the future value of the country's currency, reflecting the possibility that a basket peg was more open to manipulation, particularly if details of the composition of the basket were not publicized.
c. Independent floating.
Independent floating means that an exchange rate of any currency is free to float to any level which supply and demand may determine.
Independent floating potentially provides a mechanism for an efficient foreign exchange market.
Most industrial countries and some developing countries have adopted floating or flexible exchange rate systems, because countries have found it expedient for both economic and political reasons to adopt a more flexible system.
Based on: Macroeconomic Adjustment:
Policy Instruments and Issues
IMF Institute, 1992
Words you may need:
peg n привязка
basket of currencies корзина валют
alternative approach альтернативный подход
weighted average взвешенное среднее значение
swing n колебание
vis-a-vis prep пo отношению к
independent floating свободный плавающий курс
expedient adj целесообразный
Eх. 19. a) Read the text that follows and find the parts explaining: the aim of reforms of the banking systems in the countries mentioned in the article; the causes of bank insolvencies.
b) Reread the article again and sum up the conclusions of the meeting described in it.
Central Banking Reforms Advance in Baltic and CIS Countries
On May 13-14, 1996, the IMF arranged the ninth coordinating meeting on central banking technical assistance to the Baltics and the Commonwealth of Independent States central banks. The meeting was held at the Bank for International Settlements in Basel.
Reforms in the monetary, exchange, and banking areas in the Baltic and the CIS countries have sought to achieve a market-based determination of interest rates and exchange rates, to control banking system liquidity through indirect instruments, and generally to foster the use of markets for central banking operations. Implementation of market-based arrangements for monetary control has required careful coordination of reforms to foster money and foreign exchange markets and to strengthen key functions of central banking, including critical actions in the payment system, accounting, and bank supervision. Reforms have been designed to bring about macroeconomic stabilization as well.
The participants of the meeting stressed that in most countries, following the introduction of new laws, the central bank has de jure independence from political authorities. It has the authority to formulate and implement monetary policy and to implement foreign exchange policy. Most countries have liberalized deposit and lending rates and rely mainly on indirect instruments, although the use of market-based instruments is limited.
Interest rate and exchange rate management is typically governed by a ceiling on net domestic assets of the central bank and a floor on net international reserves. Many countries in the regions have developed money, securities, and foreign exchange markets.
Monetary management is exercised, primarily, through reserve requirements, refinance facilities, and intervention in the foreign exchange market and, to a limited extent, through auctions of treasury bills and central bank papers.
Direct central bank credit to the government, although decreasing, remains an important source of reserve money creation in some countries. Public debt management is based on treasury-bill auctions, which are being developed in most countries; secondary market activity typically remains limited.
Foreign exchange operations and the management of the exchange rate are in most cases conducted through an interbank auction arrangement, although dealing outside the auctions is increasingly prevalent.
In the payment system, central banks provide most clearing and settlement services and have streamlined operations to meet user needs.
Participants agreed that the causes of bank insolvencies had typically been a combination of poor lending decisions, inadequate licensing and supervision procedures, and structural changes in the public enterprise sector.
Participants at the May meeting recognized the dramatic advances made by most central banks in the region in introducing market-based instruments of monetary and exchange management and in fostering money and exchange markets. They stressed, however, that most countries have new work ahead of them in restructuring their banking systems.
Words you may need:
Bank for International Settlements Банк международных расчетов
de jure де-юре
central bank papers векселя центрального банка
prevalent adj (широко) распространенный
settlement services услуги по расчетным операциям
streamline v совершенствовать, модернизировать
Ex. 20. a) Read the text quickly for the main points.
Money is as hard to measure and define as it is to control. Money is graded according to its LIQUIDITY – notes and coins being completely liquid, whereas some kinds of bank deposits become spendable only after notice to withdraw them has expired.
In Britain:
• M1 is notes and coins in circulation, plus sterling sight deposits (that is, those withdrawable without notice) held by the private sector.
• Sterling М3 (М3) is Ml plus sterling time deposits (those requiring notice of withdrawal) of the British private sector, plus all sterling deposits of the British public sector. To get M3, add the foreign currency deposits of all British residents.
• PSL2, short for private sector liquidity, is notes and coins in circulation; all sterling deposits (that is, including time deposits and certificates of deposit); other money market instruments (for example, treasury bills, bank bills and local authority debt held by the non-bank private sector); building societies' share and deposit accounts, and some national savings securities.
The United States uses three measures:
• M1 is defined as currency in circulation, travellers' cheques, demand deposits of the private sector at commercial banks, automatically withdrawable deposit accounts at banks and thrift institutions, credit union share draft accounts, and demand deposits at mutual savings banks.
• M2 is Ml plus savings and small-denomination time deposits, overnight deposits at commercial banks, overnight Eurodollars held by American residents (other than at Caribbean branches of Fed member banks) and balances of accounts with money market funds.
• M3 is M2 plus large denomination time deposits, companies term repurchase agreements at commercial banks and savings and loan associations, and money markets funds held by institutions.
Based on: The Pocket Economist
Words you may need:
measure v измерять
grade v (зд.) группировать, классифицировать
spendable adj могущий быть истраченным
notice to withdraw (the deposit) уведомление о снятии вклада
sterling sight deposit вклад до востребования в фунтах стерлингов
PSL-private sector liquidity ликвидность частного сектора Великобритании (широкий показатель денежной массы в обращении)
certificate of deposit депозитный сертификат
building society строительное общество
travellers' cheques дорожные чеки
share draft account чековый паевой счет
mutual savings bank взаимно-сберегательный банк
overnight Eurodollars суточные евродоллары
money market fund взаимный фонд денежного рынка
repurchase agreement (REPO) соглашение о продаже и обратной покупке (РЕПО)
savings and loan association ссудо-сберегательная ассоциация
b) Reread the text more carefully to complete the sentences below:
1. Money is graded ....
2. Notes and coins ....
3. Ml is....
4. Private sector liquidity is notes and coins in circulation plus ....
5. Sterling M3 is M1 plus ....
6. In the United States Ml includes ....
7. M2 is M1 plus... .
8. M3 is M2 plus....