Banking system in the uk and the usa Text 1 The Bank of England

Vocabulary notes

		to be short of money (of funds) — испытывать недостаток в деньгах
		to manage the National Debt— обслуживать государственный долг to manage the country’s reserves of gold and foreign exchange — управлять золотым и валютными резервами страны
		to be public owned — принадлежать государству to be privately owned — являться частной собственностью
		Court of Directors — Совет управляющих
		to run a public company — осуществлять руководство публичной компанией
		to advise the Governor on… — консультировать Управляющего (главу центрального банка Великобритании) по (вопросам)
		to issue banknotes — выпускать банкноты
		to offer a wide range of services through branch networks — предлагать широкий спектр услуг через сети отделений банков
		to look after the nation’s money — регулировать денежную массу страны
		to keep an account for the government — вести банковский счет правительства to manage an account— обслуживать счет to pay the country’s revenue into an account — зачислять гос. доходы на счет to hold an account with the bank — иметь счет в банке syn. to maintain an account
		to raise money by income tax, VAT, duty on tobacco — привлекать денежные средства, взимая подоходный налог, НДС, пошлинные сборы на табачные изделия
		to make payments to cover pensions and social security — производить выплаты пенсий и пособий по социальному обеспечению
		to supervise the activities of the banks — осуществлять надзор за деятельностью банков
		lender of the last resort — кредитор последней инстанции
		to intervene in the foreign exchange market — проводить валютные интервенции
		to implement a monetary policy — проводить денежно-кредитную политику syn. to pursue a policy to carry out a policy to make a policy — формировать политику

Answer the following questions based on the text.

1. When was the Bank of England founded and nationalized?

2. What was the reason for its foundation?

3. What body runs the Bank?

4. In what way are the Governor and the Directors appointed?

5. What were the key functions of the Bank at the time of its foundation?

6. What functions are performed by the Bank of England at present?

7. What monetary policy does the Bank pursue?

In 1694 the country was at war with France and the government was desperately short of money to finance the war. A group of City merchants decided to form a national bank and, with Parliament's approval set up a company as 'The Governor and Company of the Bank of England'. The public were invited to invest in the Bank and within twelve days £1,200,000 was raised which was immediately lent to the government to form what has become commonly known as the 'National Debt' — which represents all the money owed by the government — and managing this is still an important function of the Bank today.

From the time of its foundation the Bank had strong links with the government and these strengthened over the centuries until in 1946 it was nationalised and became publicly owned.

The Bank of England is controlled by a Court of Directors — similar to a board of directors running a large public company — made up of the Governor, the Deputy Governor and sixteen directors. They are all appointed by the Crown — although in practice this is the Prime Minister.

All are influential and widely experienced people and their job is to advise the Governor on conditions in the economy, industry and commerce.

The Bank of England is still the only bank in England and Wales permitted to issue banknotes. (Some banks in Scotland still issue their own.) They have a printing works in Essex where about five million new notes are printed every day and the same number destroyed. The notes are distributed to the public by the high street banks.

The term high street banks is used to mean all of the banks which have branch networks through which they are able to offer a wide range of services to a large number of customers. Of these Barclays, Lloyds, Midland and National Westminster are the biggest, closely followed by TSB and Abbey National.

The Bank of England looks after the nation's money. It keeps the bank accounts for the government into which the country's revenue is paid. This includes money raised by income tax; VAT; duty on tobacco, beer, wines and spirits; road fund tax and petrol tax. From this income payments are made to cover pensions; social security; unemployment and sickness benefits; the National Health Service; building of roads and schools; the armed services and defence programme.

A further responsibility of the Bank of England is to supervise the activities of the banks to ensure that their depositors’ money is not at risk.

The Bank acts as lender of the last resort. It lends money to commercial banks when they are short of funds.

The government does not finance all its spending from the money raised through taxes. It has to borrow money to meet its needs and it is the Bank of England which arranges the borrowing.

The Bank of England manages the Country's reserves of gold and foreign exchange and may, if necessary, intervene in the foreign exchange market to keep the price of the £ in line with other currencies.

All the British banks hold accounts with the Bank of England as do many overseas central banks and foreign banks. The Bank has accounts for such bodies as the International Monetary Fund and the International Bank for Reconstruction and Development (the World Bank).

It is the job of the Bank of England to implement the government's monetary policy which means carefully monitoring and sometimes controlling the supply of money.