I. Mark the correct answers on the following questions:

1. To the national taxes and other compulsory payments we can deliver:

1. excise tax;

2. the market collection;

3. rental payment;

4. profit tax;

5. rate.

2. Match the local taxes:

1. advertising tax;

2. commercial patent payment;

3. hotel payment;

4. craft tax.

3. Match taxes, which are paid by the juridical persons:

1. tax on income;

2. value-added tax;

3. craft tax;

4. excise tax

4. Match taxes which are paid by legal and natural persons:

1. land-tax;

2. craft tax;

3. rate;

4. tax paid by the transport owners.

5. Name the functions of the tax administration:

1. implementation of the tax documents control;

2. numeration of the tax volumes;

3. implementation of the checking up the special licenses;

4. implementation of the control of the fullness and timeliness of the tax payments.

II.Fill the tables:

a )

b )

III. Match what statements are true and what are false. Results write to the table:

1. To have an effective tax system, government must have criteria or standards.

2. People seem to be more willing to pay taxes, when they don’t understand them.

3. A tax should be easy to collect.

4. It should require a large enforcement staff.

5. People always agree about what is or is not fair when it comes to taxes.

6. It is possible to measure benefits, derived from government spending.

7. People with higher incomes suffer less discomfort than people with lower incomes even if they pay higher taxes.

8. The only means most people have of paying taxes is the income they earn.

Table

	1	2	3	4	5	6	7	8
True
False

 Unit 4

MONETARY POLICY. CENTRAL BANKING.

 I. READING

1. Stress the first syllable:

monetary, safety, policy, liquid, governor, federal, ratio, clearing, fraction, target, stabilize, quantity, transfer.

2. Stress the second syllable:

resort, responsible, supply, liquidity, ensure, reform, prevent, reserve, executive, ability, impose, deposit, reduction, inflation, restriction, collect, requirements, oblige, despite, perform, accept.

3. Stress the third syllable:

intervene, refinancing, circulation, regulations.

4. Read the text:

Central banking system

The central banking system is a major sector of any modern monetary system. It is of great importance to the fiscal policy of the national government and the functioning of the private sector.

Central banks such as the Bank of England, the Federal Reserve Board of the US, the Bundesbank of Germany, the National Bank of Ukraine function for the government and other banks, not for private customers. They are responsible for the implementation of monetary policy and supervision over the banking system.

In particular, they control the money supply, fix the minimum interest rate, act as lenders of last resort to commercial banks with liquidity problems, issue coins and bank notes, influence exchange rates by interventing in foreign exchange markets.

To ensure the safety of the banking system, central banks impose reserve requirements, obliging commercial banks to deposit a certain amount of money with the central bank at zero interest. Central banks in different countries also impose different “prudential ratios” on commercial banks such as capital ratio and liquid ratio.

In the course of market reforms in Ukraine the National Bank has been pursuing moderately tight monetary policy aimed at further reduction of inflation and putting an end to direct budget deficit crediting¹. The NBU has been using the following main instruments of monetary policy:

• fixed targets for the money supply growth;

• refinancing of commercial banks;

• interest rates;

• open market operations;

• commercial banks reserve requirements;

• foreign currency control;

• direct quantity restrictions.

The Federal Reserve System of the USA or “Fed”, as it is known in financial circles, is an independent agency of Congress founded in 1913. The system consists of twelve federal reserve banks and a board of governors. The board of governors has its headquarters in Washington, D.C.

The Fed performs three major functions. It provides services to the banking system and federal government; it stabilizes the banking system; and it controls the quantity of money in circulation.

The most important service of the Fed is check clearing, i.e. making sure that checks written on one bank can be accepted at any other bank in the country.

The Fed performs a number of other services for banks and thrift institutions. It provides currency to banks and collects worn currency. It also provides safekeeping for securities.

Finally, the Fed performs banking services for the federal and foreign governments. It maintains US Treasury accounts from which all federal government payments are made. In addition, it assists in international transfers of funds by private firms and international agencies.

A second function of the Federal Reserve is stabilizing the banking system.

Banking panics often took place in the nineteenth century. Preventing such panics was the main reason for setting up the Federal Reserve System. With this mind, the Fed was given broad powers to regulate banks.

The Fed’s regulations are aimed at making sure that banks use sound business practices. For example, the Fed requires banks to hold a minimum fraction of their deposits as reserves.

The Fed was also given the power to supply extra reserves when needed. There are two ways in which the Fed can put reserves into the banking system. First, it can lend reserves to banks. Second, it can supply reserves to the banking system by buying government bonds from the public on the open market, in other words, by participating in open-market operations.

Fed has taken on another role as well, than of partner, with Congress and the executive branch, in the making of economic policy. The Fed’s power as an economic policymaker comes from its ability to control bank reserves and, hence, to control the total amount of money in circulation.

NOTES:

¹direct budget deficit crediting – пряме кредитування бюджетного дефіциту

VOCABULARY LIST

central banking system – система центрального банку

monetary system – грошова система

to be of importance – бути важливим

money supply – грошова маса; кількість грошей в обігу

lender – кредитор

lender of last resort – останній кредитор в критичній ситуації, центральний банк

liquidity – ліквідність

issue (coins and bank notes) – здійснювати емісію

exchange rate – обмінний курс

intervene – втручатися

foreign exchange market – ринок іноземної валюти

safety – надійність, безпека

reserve requirements – резервні вимоги/норма обов’язкового резервування

oblige – змушувати, зобов’язувати

deposit – депонувати

“prudential ratios” – „коефіцієнти розсудливості”

deposit – внесок, вклад

capital ratio – відношення капіталу до активів

liquid ratio – відношення ліквідних активів банків до сумарних депозитів

target – мета, контрольна цифра

refinancing – рефінансування

open market operations – операції на відкритому ринку

restriction – обмеження

the Federal Reserve System – Федеральна резервна система

financial circles – фінансові кола

federal reserve bank – федеральний резервний банк

board of governors – рада керівників

headquarters – штаб-квартира

executive branch – виконавча гілка влади

term of office – термін повноважень

to perform a function – виконувати функцію

money in circulation – гроші в обігу

to make sure – забезпечувати, гарантувати

accept – акцептувати, приймати

check clearing – кліринг чеків, чековий кліринг

collect – інкасувати

worn currency – старі банкноти

safekeeping – безпечне зберігання

to maintain accounts – вести рахунки

transfer of funds – переведення коштів

international agency – міжнародне агентство

banking panic – банківська паніка

prevent – попереджувати, запобігати

broad powers – широкі повноваження

regulation(s) – правило, інструкції

to be aimed at doing smth – бути направленим на ...

sound business practice – чесна практика ділових відносин

fraction – частина, частка

government bond – державні облігації

despite – не дивлячись на

in the event that … – у випадку, якщо ...

 II. VOCABULARY EXERCISES

Ex.1. Find equivalents:

1. fiscal policy;

2. lender;

3. interest rate;

4. exchange rate;

5. safekeeping;

6. capital ratio;

7. liquid ratio;

8. transfer of funds;

9. quantity restrictions;

10. budget deficit crediting;

11. check clearing.

1. зберігання;

2. обмінний курс;

3. кліринг чеків;

4. кількісні обмеження;

5. переміщення фондів;

6. відношення капіталу до активів;

7. фінансово-бюджетна політика;

8. процентна ставка;

9. кредитування бюджетного дефіциту;

10. кредитор, позичальник;

11. відношення ліквідних активів до сумарних депозитів;

Ex.2. Enter correct correspondences in English or in Ukrainian:

ENGLISH	UKRAINIAN
	грошова маса
issue coins
fixed targets
	рефінансування
worn currency
	випускати банкноти
	нульовий відсоток
currency control
reduction of inflation
	банківська паніка
reserve requirements
	державні облігації
open-market operations
	система центрального банку
implementation of monetary policy

Ex.3. Find English equivalents for the following Ukrainian phrases:

система центрального банку; бути важливим (мати значення); бути відповідальним за проведення кредитно-грошової політики; контролювати грошову масу; встановлювати процентну ставку; проблеми нестачі ліквідних засобів; здійснювати емісію грошей; надійність банківської системи; депонувати засоби в центральному банку під нульові відсотки; бути відомим у фінансових колах; рада керівників; це результат тривалого терміну повноважень керівників; члени ради призначаються; голова ради обирається; чеки, що виписані на банк; депонувати чеки у банку; здійснювати кліринг чеків через Федеральну Резервну Систему; вести рахунки; основна причина заснування Федеральної Резервної Системи; купувати державні облігації; операції на відкритому ринку; багато банків збанкрутували.

Ex.4. Fill in the blanks with prepositions, pronouns or conjunctions if necessary:

1. Central banking system is … great importance … the fiscal policy … the national government … the functioning … the private sector.

2. Central banks are responsible … the implementation … monetary policy … supervision … the banking system.

3. Central banks act … lenders … last resort … commercial banks … liquidity problems.

4. The Fed provides services … the banking system … federal government … controls the quantity … money … circulation.

5. The most important service … the Fed is making sure … checks written … one bank can be accepted … any other bank … the country.

6. The Fed performs a number … other services … banks … thrift institutions.

7. Fed assists … international transfers … funds … private firms … international agencies.

8. The Fed’s regulations are aimed … making sure … banks use sound business practices.

Ex 5. Complete the following sentences:

1. The central banking system is … .

2. Central banks control … , fix the minimum interest rate, act as … , issue coins and bank notes, influence … .

3. To ensure the safety of the banking system, central banks …, obliging commercial banks ….

4. In the course of market reforms in Ukraine the National Bank … .

5. The Federal Reserve System of the USA or “Fed is … .

6. The system consists of … .

7. The Fed provides … , stabilizes … and controls.

8. The Fed provides … and collects … .

9. There are … ways in which the Fed can put reserves into the banking system: … .

Ex 6. Answer the following questions:

1. What is the major sector of any modern monetary system?

2. What are central banks responsible for?

3. What functions do central banks perform?

4. What is done to ensure the safety of a banking system?

5. Why are “prudential ratios” imposed on commercial banks?

6. What is the structure of the Federal Reserve System?

7. How are members of the board appointed?

8. What functions does the “Fed” perform?

9. What services does the “Fed” perform for banks and the government?

10. How does the “Fed” contribute to the stabilization of the banking system?

11. What role does the “Fed” play in the making of economic policy?

Ex 7. Translate into Ukrainian:

1. Система центрального банку – це один із найголовніших секторів сучасної грошової системи.

2. Система центрального банку відіграє надзвичайно важливу роль при проведенні урядом фінансово-бюджетної політики та у функціонуванні приватного сектору.

3. Центральні банки відповідальні за здійснення кредитно-грошової політики та нагляд за банківською системою.

4. Центральні банки контролюють грошову масу, фіксують мінімальну процентну ставку, здійснюють емісію грошей.

5. Федеральна резервна система США була заснована у 1913 і нині складається з 12 федеральних резервних банків та ради керівників.

6. Федеральна резервна система обслуговує банківську систему та федеральне управління, стабілізує банківську систему та контролює кількість грошей в обігу.

7. Найбільш важливим завданням Федеральної резервної системи є кліринг чеків, тобто переконання у тому, що чеки, виписані в одному банку можуть бути прийняті в іншому банку країни.

8. Федеральна резервна система забезпечує банки новою валютою та збирає старі банкноти.

9. Федеральна резервна система розробляє економічну політику країни, а саме контролює банківські резерви та загальну кількість грошей в обігу.

Ex.8. Match each term in Column A with its definition in Column B:

Column A

1. Central bank

2. Commercial bank

3. Interest rate

4. Exchange rate

5. Lender

6. Deposit

7. Security

Column B

1. the price of one currency in terms of another

a privately owned bank that provides a wide range of financial services both to the general public and to firms;

2. an investment or item of financial value, esp a stock, share or debenture, that can be bought and sold on a stock exchange

3. the amount charged for a loan, usually expressed as a percentage of the sum borrowed

4. a bank that provides financial and banking services for the government of a country and its commercial banking system

5. a sum of money paid into a bank or savings accounts

6. a person or an organization that lends money charges interest on the repayments, but not a building society, a bank or an insurance company

Ex. 9. Write several paragraphs on the following using given words and word combinations:

a) the central banking system

monetary system; fiscal policy; government; private sector; central banks; implementation; monetary policy; supervision.

b) main functions of the central banks

to control; money supply; to fix; interest rate; lender; liquidity problems; to issue coins and bank notes; exchange rate; to intervent; to ensure the safety; to oblige; to deposit; amount of money zero interest; “prudential ratios”.

c) National Bank of Ukraine

market reforms; to pursue; monetary policy; inflation; budget deficit crediting; to use instruments; fixed targets; refinancing; interest rates; reserve requirements; foreign currency; quantity restrictions.

d) Federal Reserve System

agency of Congress; reserve banks; board of governors; headquarters; functions; to provide services; to stabilize; to control; quantity of money

 III. ORAL PRACTICE