Liquidity

Liquidity is determined by the speed and certainty which as an asset can be converted into cash (notes and coins) in order to be used as a means of payment. The quicker as an asset can be converted into cash, the more liquid it is. Therefore, money is sure to be the most liquid asset of all since it is widely accepted as a medium of exchange, while durable and highly specific assets such as machinery are the least liquid as such asset cannot be converted into money without finding a buyer and determining the value of the asset to be sold.

A bank’s assets can also be characterized in terms of the liquidity.

Loans to households and firms do not appear to be very liquid forms of bank lending, for the borrower may not be able to repay the sum owed to the bank whenever the bank demands.

Securities including government bonds and shares of firms, though traded on the stock exchange, cannot be relied upon for a certain amount of cash as their prices are known to fluctuate from day to day. Therefore, financial investment in securities seems also to be liquid.

Of all bank assets cash and short-term market loans are sure to be the most liquid ones.

Используя текст, закончите следующие предложения:

1. The easier an asset is converted into cash …

2. Machinery can be included in illiquid assets since …

3. Loans to households and firms turn out not to be highly liquid for …

4. The bank cannot expect to raise a needed amount of cash by selling securities because …

5. The most liquid bank assets happen ….

Text 2.Types of banks

В тексте приведены наиболее важные разновидности банков. Каждый тип имеет свои отличительные черты. Прочитайте текст и сопоставьте характеристику банка с его названием.

1. building societies 2. investment banks 3. central banks 4. supernational banks 5. commercial banks 6. universal banks 7. merchant banks 8. finance house

строительные общества инвестиционные банки центральные банки всемирные банки коммерческие банки универсальные банки торговые банки финансовый дом

А. Банк, сочетающий операции с банковскими вкладами и ссудами с операциями с акциями и облигациями.

Б. Банк, специализирующийся на операциях с деньгами; получает и хранит вклады на текущем и сберегательном счетах, ссужает деньги и т.д.

В. Банк, обеспечивающий ссуды под залог; привлекает вкладчиков, выплачивая более высокий процент, чем другие банки.

Г. Банк, специализирующийся на мобилизации средств для промышленности, осуществляющий обеспечение ценных бумаг для корпораций; ведает вопросами слияния и поглощения банков.

Д. Банк, выпускающий банкноты, контролирующий денежное обращение страны.

Е. Банк, выступающий как посредник, предоставляя консультации по вопросам собственности, но не дающий ссуды.

Ж. Бак, ссужающий деньги для покупки в рассрочку или кредит.

1. Central Bank supervise the banking system; fix the minimum interest rate issue bank notes; control the money supply; influence exchange rates; and acts as a lender of last resort.

2. Commercial banks are businesses that trade in money. They receive and hold deposits in current and savings accounts, pay money according to customers’ instructions, lend money, and offer investment advice, foreign exchange facilities, and so on. In some countries such as England these banks have branches in all major towns; in other countries there are smaller regional banks. Under American law, for, example, banks can operate in only one state. Some countries have banks that were originally confined to a single industry, e.g. the Credit Agricole in France, but these now usually have a far wider customer base.

3. In some European countries, notably Germany, Austria and Switzerland, there are universal banks which combine deposit and loan banking with share and bond dealing, investment advice, etc. Yet even universal banks usually form a subsidiary, known as a finance house, to lend money – at several per cent over the base lending rate – for hire purchase or installment credit that is, loans to customers that are repaid in regular equal monthly amounts.

4. In Britain, the USA and Japan, however, there is a strict separation between commercial banks and banks that do stockbroking or bond dealing. Thus, in Britain, merchant banks specialize in raising funds for industry on the various financial markets financing international trade. Issuing and underwriting securities, dealing with takeovers and mergers, issuing government bonds and so on. They also offer stockbroking and portfolio of management services to reach corporate and individual clients. Investment banks in the USA are similar, but they can only act as intermediaries offering advisory services, and do not offer loans themselves.

5. In Britain there are also building societies that provide mortgages, i.e. they lend money to home buyers on the security of houses and flats and attract savers by paying higher interest than the banks. The savings and loan associations in the United States served a similar function and most of them went spectacularly bankrupt at the end of the 1980s.

6. There are also supernational banks such as the World Bank or the European Bank for Reconstruction and Development. Which are generally concerned with economic development.