4. Translate the text. Banking transactions

Banks are closely concerned with channeling money into or out of the economy. They often cooperate with the governments in stabilizing economies and preventing inflation. They are specialists in the business of providing capital and in allocating funds on credit.

Banks originated as places to which people took their valuables for safe-keeping, but today the great banks of the world have many functions in addition to acting as guardians of valuable private possessions. All of us know of banks receiving money from their customers in two distinct forms: on current account and deposit account. With a current account a customer can issue personal cheques. No interest is paid by the bank on this type of account. With a deposit account, however, the customer has to leave his money in the bank for a minimum specified period of time. Interest is paid on this money. The bank in turn lends the deposited money to customers who need capital. This activity earns interest for the bank. This interest being always at a higher rate than any interest which the bank pays to its depositors is of common knowledge.

The primary function of a bank today is being an intermediary between depositors who wish to make interest on their savings, and borrowers who seeks to obtain capital. The bank is a reservoir of loanable money, with streams of money flowing in and out. For this reason the economists and financiers often talk of money being liquid, or of the liquidity of money. Many small sums of money which might not otherwise be used as capital are rendered useful simply because of the banks acting as a reservoir.

The system of banking rests upon trust between bankers, depositors and borrowers. They all agree to behave in certain predictable ways in relation to each other. Consequently, business can be done and cheques can be written without any legal tender visibly changing hands.

5. Answer the questions.

1. What was the original business of the banks?

2. Do the continue performing this business?

3. Are there any other operations performed by the banks today?

4. What is the main operation of the banks today?

5. What is the way they make profit?

6. Are their operations beneficial for the economy of the country?

7. Are there foreign banks in our city?

8. Are they helpful to our citizens?

9. Does our economy profit from their operations?

10. What is the difference between a borrower and a depositor?

Additional exercises

This section is intended for the students having a higher than usual level of knowledge.

1. Subject with the Infinitive.

1. Prior to the 1930s, the economists seemed to consider there could never be a Great Depression.

2. Economy was considered to be inherently stable.

3. Classical economists are known to have propounded an optimistic view of the macro economy.

4. According to the classical view, economy seems to self-adjust to deviations from its long-term growth trend.

5. Economic downturns were viewed to be temporary setbacks, not permanent problems.

6. This optimistic view of the macro economy is known to be summarized in Say’s Law: supply creates its own demand, whatever was produced would be sold.

7. The “underground” economy is known to be motivated by tax avoidance and the desire to conceal illegal activities.

8. The Council of Economic Advisers raised the level of unemployment thought to be compatible with price stability.