Text-study

1. Learn the following words

to confide – (confide in) верить, доверять; полагаться;

securities – ценные бумаги;

ratio – соотношение;

to refine – повышать качество;

to infringe – нарушать, преступать (закон, обязательство);

to cancel – аннулировать, отменять; отказываться (от обязательств);

to cancel debts — аннулировать долги.

2. Answer the following questions

1. What models do banks use to calculate market risk?

2. What other risks do banks run?

3. How will supervisors review the process of risk assessment?

4. How will Basle 2 differ from the previous Basle framework?

5. When is Basle 2 meant to be ready?

6. What steps should be made to prepare the Basle 2 framework?

7. What problems does Basle 2 have?

8. What are the factors that could raise the cost of borrowing for small and medium-size enterprises in Europe?

9. What is the difference between continental and British fund managers?

10. What is implied by “a process of continuous evolution of the new Basle proposals”?

11. Why do many of those affected object to writing Basle 2 into European law?

3. Complete the sentences with suitable words from the box

the regulation of securities market in the European union; the Basle committee on banking supervision; market risk; operational risk, capital-charges; public ratings; banking sector, loans, distortions

1. The challenge on …, is to turn 560 pages of guidance on international banking supervision into EU law.

2. …, which represents bank supervisors in big industrial countries, produced refined proposals that will revolutionize the supervision of the world's biggest banks.

3. Banks already use internal models to calculate ….

4. They are developing new techniques to assess other risks they run, broadly known as …..

5. The goal is a safer, more market-driven - and hence more efficient - …. .

6. The previous Basle framework, set in 1988, laid down clear … for credit exposures according to whether the borrower was a country, a bank, or a non-bank.

7. It did much to encourage banks worldwide to build …, but it was crude.

8. It tempted some banks, especially in Japan and South Korea, to make loans on the basis of the …

9. The … attracted rather than of banking prudence, with disastrous results.

10. Supervisors hope that Basle 2 will reduce such ….

4. Fill in the blanks with articles if needed

Continental fund managers tend to be owned by … banks, with stacks of capital, whereas Britain has scores of independent fund-management firms with little capital behind them. A threatened charge for … operational risk, based on the amount of funds under management, might be out of proportion to … risks many firms actually run. Or so argues the Association of Private Client Investment Managers & Stockbrokers in London. It depends on whether … firm gives advice to clients, for which it can be sued, or bears the risks of clearing and settling securities. If neither case applies, the case for putting up more capital is less strong. Yet such niceties are not written into either the consultative document or Basle 2. The aim is to produce a draft directive by October this year. However, other groups are also likely to lobby the Commission and the European Parliament for … special treatment. That could slow things down greatly.

In addition, there are fears that … directive will not be flexible or speedy enough to match what is proving to be a process of continuous evolution of … new Basle proposals.