Vocabulary practice

■ Ex. 1. Look at the words in the box. Match them with the correct definition from the list below.

Lender of the last resort, National Health Service, National Debt, Governor, Court of Directors, high street banks, The Bank of England.

1. All the money borrowed by a government.

2. Central British bank owned by the state.

3. Central Bank which lends money to commercial banks, with the other sources exhausted.

4. Person (nominated by the British government) who is in charge of the Bank of England.

5. Main British banks which accept deposits from individual clients.

6. A system of national medical care paid for mainly by taxation.

7. A group of directors appointed by the crown to run a large public company.

■ Ex. 2. Match the nouns in the left-hand column with the verbs in the right hand column.

account	to raise to implement to settle
money	to carry out to borrow to hold to look after
policy	to keep to be short of to make to pay revenue into

■ Ex. 3. Go through the passage again. Make a list of the functions performed by the Bank of England at present. Comment on them.

Text 2 The Federal Reserve System

Vocabulary notes

		to be associated with smth — быть связанным чем-либо
		in the wake of — вслед за
		to provide a service — предоставлять услугу
		to assume responsibility for smth — брать на себя ответственность за что-либо
		banking hours — часы работы банка
		to forward smth — пересылать что-либо
		to attend to smth — зд. отвечать за что-либо
		to accept deposits — принимать вклады syn. to take in
		to pay a bill — выплачивать по векселю
		to collect а bill — инкассировать (взимать) деньги по векселю
		to be the core of smth — быть основой чего-либо
		to be a component of smth — являться составной частью чего-либо
		to be appointed for a 14-year term — быть назначенным на срок в 14-лет
		to be profit-motivated — работать с целью получения прибыли
		to meet requirements — отвечать требованиям
		to hold 3 percent of one's capital as stock in the Reserve bank — хранить 3 процента своего капитала (в качестве резерва) в Резервном банке
		to supervise financial institutions — осуществлять контроль над финансовыми учреждениями
		to supply payments services to the public — предоставлять клиентам услуги по оплате
		securities market — рынок ценных бумаг
		foreign exchange market — валютный рынок

Answer the following comprehension questions based on the text.

1. How did banking start in the United States?

2. How did the express company’s safe become the local bank?

3. What companies are associated with the development of banking in the United States?

4. What functions did they exercise?

5. What is the core of the US financial system?

6. What is the organization chart of the Federal Reserve System?

In the United States the origins or banking services were associated with the Gold Rush. The first gold strike occurred in California in 1848. In the wake came the problems of carrying mail and gold dust over hundreds of miles. A concern called Adams and Company opened its office in San Francisco in 1849. It provided an express mail and stage-coach service to the mines. The express company received the miner's gold for the purpose of shipment. It weighed the gold, gave a receipt for it, and assumed responsibility for its safety. Thus the express company's iron safe became the local bank. About this time in Sacramento a group also opened a bank. There were three clerks, all armed with Colt revolvers and knives, and the banking hours were from six in the evening until ten at night. It was in 1852 that Wells Fargo and Company was born. In the July of that year two of its senior men arrived in California, one to be responsible for the express services, the other for the banking. The company forwarded packages, parcels and freights of all descriptions between New York and San Francisco, purchased and sold gold dust, bullion and bills of exchange. It also attended to the payment and collection of notes, bills and accounts. It was very different from the British goldsmiths and their notes. And yet the basic functions of providing security, accepting deposits, paying and collecting bills, were exactly the same. All that has happened since has been only a development of these basic functions.

At present the Federal Reserve System is the core of the country's financial institutions, payment processes, markets and instruments. The system has four basic functions: (1) influencing the supply of money and credit, (2) regulating and supervising financial institutions, (3) serving as a banker and fiscal agent for the government, and (4) supplying payments and services to the public through depositary institutions. The system is an unusual system of public and private elements and centralized and decentralized components. At the head of its formal organization is the Board of Governors, located in Washington, D.C. The seven members of the board are appointed for 14-year terms by the President with the advice and consent of the Senate. At the next level are the regional Federal Reserve Banks. Each of the 12 Reserve Banks serves a certain region of the country. The Reserve Banks are not profit motivated. Instead their policy is based on the System's estimates of the needs of the economy. The organization of the System also includes The Federal Open Market Committee. It is the most important money policymaking body because it exercises broad control over the growth of the nation's money supply. It also has charge of the System's operations both in domestic securities market and in foreign exchange markets. Two-fifths of the 12.600 commercial banks in the US belong to the System. National banks must be members; state-charted banks may join if they meet certain requirements. Each member bank holds 3 percent of its capital as stock in its Reserve Bank. About 25.000 other depositary institutions provide American people with banking services.

■ Ex. 1. Mark the true (T) and false (F) statements.

1. Banking in the United States started at the end of the 19^th century.

2. A concern called Adams and Company received the miners’ gold for the purpose of shipment.

3. It was in 1852 that Wells Fargo and Company was born in Sacramento.

4. Wells Fargo and Company provided basic banking services.

5. The Federal Open Market Committee is the key element of the Federal Reserve System.

6. Most banks in the US belong to the Federal Reserve System.

■ Ex. 2. Look at the words in the box, all of which are from this unit. Match the words with the correct definition from the list below.

account, foreign exchange, bond a bill of exchange, deposit, security

1. An order by the person directing a second to pay a third.

2. Cash, checks, or drafts placed with a financial institution for credit to a customer’s account.

3. Instruments employed in making payments between countries.

4. Certificate evidencing ownership of equity (stock), ownership of a debt obligation payable (bond), and the rights to ownership implied by options and warrants.

5. A record evidencing funds on deposit under a particular name.