I. Answer the following questions:

1. Why is the central banking system a major sector of any monetary system?

2. How long is the history of modern central banking?

3. What are the functions of a central bank?

4. What does the nature of a central bank depend on?

5. What are the main distinctions between central and commercial banking?

II. Are the following statements true or false? Correct the false ones:

1. The object of central banks in the monetary field is to support the Government’s activities in other fields.

2. Every bank issues its own notes.

3. Private individuals and businesses often deal with central banks.

4. Central bank is a bank officially appointed by law to work closely with the Government.

5. Commercial banks perform the duties of issuing and managing the country’s currency.

6. The commercial banking system is profit motivated.

III. Render the text in English:

Федеральная резервная система была создана в 1913 г. на основании закона, принятого Конгрессом. Наиболее важным органом в Fed является совет управляющих, находящийся в Вашингтоне, федеральный округ Колумбия. Совет состоит из семи членов, каждый из которых назначается на 14-летний срок президентом США. Совет возглавляется председателем, назначаемым из состава управляющих на 4-летний срок.

Fed – это банк банков. Коммерческие банки держат свои депозиты в Fed и осуществляют платежи друг другу через перевод средств с этих депозитов. Fed устанавливает резервные требования для всех банков.

Федеральная резервная система состоит из 12 округов, каждый из которых имеет свой резервный банк. Предоставляя совету материалы по анализу экономической ситуации в каждом из округов, банки тем самым держат совет в курсе событий, происходящих в стране.

IV. Fill in the blanks with proper words or word combinations:

board of directors maximizing profit

public and private influences top executive officers

Federal Reserve bank stockholders

public welfare

The United States is divided into 12 Federal Reserve Districts, each containing a … . A total of 25 branches serve particular areas within the various districts. Blending … , the corporate organization of the Federal Reserve banks resembles that of commercial banks. Each Reserve bank is headed by a … who select the … . Basic differences as compared with commercial banks include the absence of powers held by … in private corporations and orientation toward enhancing … rather than … .

V. Give a summary of the text. Loans in the united kingdom

In the process of social production there can be saved up stocks of money, that are kept in the Treasury, or funds, that can be accumulated by large insurance companies, banks, pension funds as well as by private savers. These stocks could be used to make different loans. Sometimes the government lends this money to various programs in education, medicine, culture, construction, to support small business, etc., the interest rate to be paid being very low. We can instance a special program called Loan Guarantee Scheme aiming at supporting small business in the United Kingdom. At 3% interest the government guarantees 70% of the money lent by the bank to a businessman. More often the funds are used to earn extra profit. The interest rate is determined as the equilibrium price in the loan market, that is that part of the capital market which is concerned with the provision of medium-term and long-term loans to governments, commercial houses and industrial companies, or in the money market for very short-term loans.

Thus, a 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. There exist many types of loans in UK economy and each of them has its specific features.

Such loans as balloon and bullet are repaid irregularly. 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; the larger repayments are known as the “balloons”. When the borrower pays only interest during the life of the loan and then repays all the principal as the final repayment, the loan is called a bullet loan.

There exist loans on mortgage of property. You will pay only 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, and each consists partly of interest and partly of some of the amount borrowed. 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. The name “table” relates to the table issued by building societies stating the amount of the monthly payments at various rates of interest and for various periods of loan. A building society can make the interest-only-loan to a retired person who pays only interest, leaving the principal to be repaid when the owner sells the house or when he dies.

A bank can lend money to a private person (personal loan) for the purpose of personal expenditure, such as payment of household bills or for buying consumption goods such as a motor car, boat, furniture, etc. Such loans are usually repayable by installments in less than two years and are often made without security; the rate is therefore high.

The hard and the soft loan is made by one country to another on condition that the borrower repays it in the lender’s currency (the hard loan) or the borrower’s currency (the soft loan).

There exist loan or state clubs and societies. A loan club is often a private club whose members, usually low-paid workers in a factory or office, pay regular amounts into a fund from which short-term interest-bearing loans are made to members who request them during the year. Fines are charged for late repayment, and interest is paid to members who deposit money with the club. On a certain date each year, usually just before Christmas, the entire fund is shared out among the members.

These are only a few examples of loans made in the United Kingdom.

TASKS