1. What role does the Central Bank perform in modern monetary system?

The most important characteristic of the modern central bank is its control over the monetary system for facilitating the achievement of national economic goals. In exerting this control, the central bank regulates the supply, cost and availability of money and credit. Monetary control is enhanced by the central bank’s monopoly on the banknote issue and its ability to create and destroy monetary reserves by its lending and investing activities. Since monetary control is a prerogative of the sovereign government, the central bank is a public service organization that emphasizes the national interest rather than its own profit or welfare.

2. What are the main differences between the central bank and commercial banks

Central and commercial banking functions involve widely differing objectives and methods, and therefore these functions are kept separate. The central bank orients its policy primarily toward the attainment of national economic objectives, exactly it has 3 main functions: managing the monetary system, fiscal agent, a banker’s bank, whereas the commercial banking system is essentially profit-motivated.

Moreover central banking is an activity separate from ordinary commercial banking? Because a central bank usually ha few transactions with private customers, dealing primarily with commercial bank and with the national government.

3. What are specific features of different kinds of loans in the uk

Loan is money lent on condition that interest will be paid at an agreed rate and that the amount lent will be repaid at an agreed time or in an agreed manner.

Balloon and bullet loans.

The balloon loan is a loan where the repayments are unevenly distributed throughout the life of the loan. The borrowers usually make larger repayments as soon as they have got a possibility to return money. Large repayments – balloons. When borrowers pays only interest during the life of the loan – bullet loan.

Loans on mortgage of property. You will pay interest during the period of the flat loan, the amount borrowed being repaid at the end of the period in cash or by arranging another loan.

The table loan is repaid by regular monthly installments ( part of amount plus an interest). Thus at the end of the period of the loan all the interest and the whole of the amount borrowed will have been paid off.

A bank can lend money to a private person from the purpose of personal expenditure, as payment of household bills etc.

AN important specification of loans is that when one country lends loan to another country on conditions that the borrower repays it in the lender’s currency(the hard loan) or the borrowers currency (the soft loan).

There exist loan clubs societies, whose members usually low-paid workers, pay regular amounts into a fund from which short-term interest-bearing loans are made to members who request them during the year.

4. What conditions should be taken into account when making/taking a loan

Preciously when you take a loan, you should understand really interest rate and compare it with the amount of money you want to take, it’s reasonableness. Secondly you should choose a regularity of your repayments and it’s character, will you whether pay only interest, or interest and a part of the whole amount and how often. If we talk about overseas loans, we take into account in what currency loan will be repaid.

If we talk about making a loan, we preciously should take into account profitability of our borrower, purpose on what people take a loan, clearly learn property he has, in order to in extreme situation you will never lose your money.