Chapter2 Fin Mon

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23 TEMA II: FINANCIAL INSTITUTIONS AND MONETARY POLICY (UNITĂȚILE 3, 4, 5) Durata (în ore de pregătire) 3,5 Total, din care: - instruire teoretică 2 ore - instruire practică 1 oră 30 minute Obiectiv general: însușirea vocabularului specific domeniului financiar-bancar în limba engleză. COMPETENŢE SPECIFICE CONŢINUT TEMATIC METODE/ FORME DE ACTIVITATE MIJLOACE DE INSTRUIRE, MATERIALE DE ÎNVĂŢARE CRITERII DE EVALUARE 1 2 3 4 5 Să asimileze vocabular, structuri lingvistice specifice și informații despre domeniul financiar-bancar. Să fie capabili descrie și să analizeze în mod fluent, în limba engleză, în scris și oral, grafice și tabele. Vocabular specific domeniilor financiar și bancar: instituții financiare, politică monetară. Timpurile modului indicativ (2): dificultăți și particularități. Numeralul în limba engleză. Metoda comunicativă: Prezentare interactivă Conversație euristică Exerciții individuale/ în grupuri mici (4- 6 studenți) Jocuri de rol - videoproiector - laptop - CD player - CD-uri și DVD- uri Capacitatea de a utiliza vocabular și structuri specifice . în limba engleză, despre domeniul financiar-bancar. Capacitatea de a descrie și analiza în mod fluent, în limba engleză, în scris și oral, grafice și tabele. INDICAȚII BIBLIOGRAFICE SUPLIMENTARE: Butzphal, Gerlinde, Maier-Fairclough, Jane. Career Express Business English 2. Cornelsen Verlag. Berlin, 2010. Capel, Will et al. Collins Business Vocabulary in Practice. (3rd ed.). Collins, 2012. Emmerson, Paul. Business English Handbook. Advanced. Macmillan, 2007. Emmerson, Paul. Business Vocabulary Builder. Macmillan, 2009. Handford, Michael et.al. Business Advantage. Cambridge University Press, 2011. *** Oxford Business Dictionary. Oxford University Press, 2008. Walker, Caroline, Harvey, Paul. English for Business Studies in Higher Education. Garnet Publishing, 2008.

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Transcript of Chapter2 Fin Mon

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    TEMA II: FINANCIAL INSTITUTIONS AND MONETARY POLICY

    (UNITILE 3, 4, 5)

    Durata (n ore de pregtire) 3,5 Total, din care: - instruire teoretic 2 ore - instruire practic 1 or 30 minute Obiectiv general: nsuirea vocabularului specific domeniului financiar-bancar n limba englez.

    COMPETENE SPECIFICE

    CONINUT TEMATIC

    METODE/

    FORME DE

    ACTIVITATE

    MIJLOACE DE

    INSTRUIRE,

    MATERIALE DE

    NVARE

    CRITERII DE

    EVALUARE

    1 2 3 4 5

    S asimileze vocabular,

    structuri

    lingvistice

    specifice i informaii despre domeniul

    financiar-bancar.

    S fie capabili s descrie i s analizeze n mod

    fluent, n limba

    englez, n scris i oral, grafice i tabele.

    Vocabular

    specific

    domeniilor

    financiar i

    bancar:

    instituii

    financiare,

    politic

    monetar.

    Timpurile

    modului

    indicativ (2):

    dificulti i

    particulariti.

    Numeralul n

    limba

    englez.

    Metoda

    comunicativ: Prezentare

    interactiv Conversaie euristic Exerciii individuale/ n

    grupuri mici (4-

    6 studeni) Jocuri de rol

    - videoproiector - laptop - CD player - CD-uri i DVD-

    uri

    Capacitatea de a

    utiliza vocabular i structuri specifice .

    n limba englez, despre domeniul

    financiar-bancar.

    Capacitatea de a

    descrie i analiza n mod fluent, n limba

    englez, n scris i oral, grafice i tabele.

    INDICAII BIBLIOGRAFICE SUPLIMENTARE:

    Butzphal, Gerlinde, Maier-Fairclough, Jane. Career Express Business English 2.

    Cornelsen Verlag. Berlin, 2010.

    Capel, Will et al. Collins Business Vocabulary in Practice. (3rd ed.). Collins, 2012.

    Emmerson, Paul. Business English Handbook. Advanced. Macmillan, 2007.

    Emmerson, Paul. Business Vocabulary Builder. Macmillan, 2009.

    Handford, Michael et.al. Business Advantage. Cambridge University Press, 2011.

    *** Oxford Business Dictionary. Oxford University Press, 2008.

    Walker, Caroline, Harvey, Paul. English for Business Studies in Higher Education.

    Garnet Publishing, 2008.

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    UNITATEA 3: FINANCIAL INSTITUTIONS

    INFO CELL BANKING AND MONETARY POLICY

    BANKING is the business of accepting deposits and lending money. It can be carried

    out by some other financial intermediaries that perform the functions of securing

    deposits and making loans.

    A BANK is an organisation that offers a wide range of services to do with the handling

    of money. They keep money on behalf of their customers, lend it to them, and offer them

    various services.

    A CENTRAL BANK in a country (i.e., The Bank of England The Bank of America, and

    The National Bank of Romania) is the banker for the government, issuing money on its

    behalf and setting the chief interest rate for loans; it is much involved in the countrys monetary policy.

    LEARNING OBJECTIVES

    After reading this chapter you should:

    know more about banking in your country and abroad

    familiarize yourselves with different monetary policies

    learn and practise your vocabulary and specific structures used in the language of banking and finance

    SECTION A INTRODUCTION

    Pre-questions

    a. Name at least three types of financial institutions that you know of and speak about

    their role in a countrys economy

    b. What services do banks usually provide for customers?

    c. How has the Romanian banking system changed in the last 4-5 years?

    d. What do you understand by the monetary policy of a country/government? Give

    examples.

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    1. Read the text to check some of your answers from the previous activity and then

    state if the following are true or false.

    a. Banks, building societies, insurance companies, pension funds and the stock exchange

    are all financial bodies.

    b. Banks can lend money to people, companies and sometimes governments.

    c. The four big banks of Great Britain are Lloyds, Barclays, National Westminster and

    The Royal Bank of Scotland.

    d. Building societies usually lend money to persons and firms to help them buy houses

    and flats.

    e. A lot of money accumulates in the pension funds, as well as in insurance funds.

    f. Through the stock exchange people buy shares from companies and receive dividends

    out of the profits.

    There are many sorts of financial bodies, doing different things, including, for

    instance, banks, building societies, insurance companies, pension funds and the

    stock-exchange. These all have roles in the working of the economy.

    Banks started by being places where people could deposit money for safety. As not

    everyone wants to take their money out at the same time, banks can safely, provided they

    keep some in hand, lend much of it out to businesses, to ordinary people and sometimes

    to governments. Banks also help people to transfer money: by cheque instead of using

    cash to pay bills. A more recent development is the issuing of cards which can be used to

    obtain cash or pay bills without cheques. Soon, we may be able to get along with using

    hardly any visible money at all.

    At first, there were a lot of local banks, one or two in each country or county

    town. Now they have been joined into four big banks (Lloyds, Barclays, National

    Westminster and Midland) that cover the whole country, with some smaller ones (for

    example, Royal Bank of Scotland, TSB and Coop).

    There are also special banks, mainly in the City of London. The most important

    are the merchant banks, which have a wide range of activities. Their main function is to

    give advice to firms, especially about buying up other firms, when there are often

    financial battles between companies. They also do a variety of other jobs for their

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    customers, like moving money abroad or helping them borrow, by selling large issues of

    shares. There are also about 500 foreign banks represented in London, providing banking

    services in many parts of the world and engaging in the financing of trade.

    Building societies began like savings clubs, where people saved up until they had

    enough to pay a deposit on a house (say 10 per cent of the cost); then the building society

    would lend them the balance out of the money other members were saving up. There is

    still some of that spirit, but the societies have grown and become more like banks. But

    they still lend only to persons, not firms, and mostly lend only to help people buy houses

    and flats (though that is changing). Until recently, they have not gone in for money

    transmission, but that too is changing.

    Pension funds provide income to live on after retirement. Generally, people have

    to contribute to them while they are still working. There is a compulsory government

    scheme under which contributions are paid to the government for a state pension. But

    often the firm people work for has its own pension scheme, and employees can use that-

    either instead of the state scheme or as well. The largest of these private schemes are

    those of the big public utilities (railways, post office, coal mines), but there are also

    numerous private firms with schemes. There is also the possibility of taking out a

    personal pension plan, the contributions to which are allowed against income tax.

    Since people contribute all their working lives, and only draw out at the end, a lot

    of money accumulates in these funds. Until it is needed, it can be lent out; this produces

    an income, which increases the pensions at the end of the day. Usually, pension fund

    managers lend money by buying shares in companies. Together with insurance

    companies, pension funds now own well over half of British industry. In addition,

    pension funds have bought land and offices, which are then rented out to produce income

    for funds.

    Insurance companies provide insurance for houses against fire or burglary; or cars

    against accidents; or people against getting ill or dying. The companies provide a contract

    undertaking to pay compensation for loss or damage, injury or death in return for a

    payment in advance made regularly. The premiums are based on the principle of pooling

    the risks, which means that the burden of the contributions to those contributing is less

    onerous than the loss which is insured would be to the individual, so each gets something

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    from it. The net result is that the individual contributes regularly, but claims something

    back only occasionally, if ever. Hence, here too a lot of money accumulates. As with

    pension funds, this is used to buy long-term assets, such as company securities and

    governments bonds. Some of the insurance companies are now very large.

    The stock exchange is an institution which makes lending to companies easier.

    One way to lend money is for an individual to lend it to someone known to him or her.

    But such loans or debts are not transferable. Another way is for a company to issue shares

    or loans which individuals may buy. The stock exchange provide a way of making such

    shares or loans easily saleable, so that a promise to pay can be turned into cash.

    One example of loans to the government, which issues promises to pay back the

    total eventually, and to pay interest each year meanwhile. These promises are in units of a

    convenient size, say 5 or 50 or 100, and all are the same, so that everyone knows

    what they are when they buy or sell them. Also everyone knows that (in this respect at

    least) most governments in normal times can be trusted to do what they promise to do.

    The result is that the units are readily saleable. Such government stocks are traded on

    the stock exchange. Prices go up and down according to the state of the market, but in

    general all are tradeable on any day at a price anyone can find out.

    Businesses can borrow in the same way through fixed-interest loans, usually

    called debentures. Another way is not to have the same fixed interest every year

    promised in advance, but a return that varies according to how much profit the firm

    makes. The individual buys in effect a part of a company (a share), and receives a

    payment out of the profits, called a dividend. These shares can also be bought and sold

    on the stock exchange. How easy they are to sell depends on how well known the firm is.

    (Many of these shares are bought up by pension funds and insurance companies since

    they have so much money to invest.)

    2. Make a summary of the text in no more than 150 words.

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    SECTION B

    3. The paragraphs of the following text have been mixed up. Put them in the right

    order and then find a title for the whole text.

    Paragraph 1

    As time went on, the Bank of England came to be the place where the ordinary

    banks kept their reserves, or from whom they could borrow reserves if they ran short. To

    be able to provide the banks with reserves when needed, the bank kept a central reserve

    of gold. When this central reserve was drawn on heavily, the Bank raised the rate of

    interest it charged the other banks when they borrowed. This discouraged them from

    borrowing too much, and drew in gold from abroad, thus protecting its own reserve of

    gold. The other banks took to charging their own customers the same rate of interest plus

    a margin, and varying their own rate with the banks rate (which came to be called Bank

    Rate). The bank thus became the body that fixed interest rates- at least short-term rates,

    up to six months or a year- inside the country. This had an influence on how much the

    ordinary banks lent.

    Paragraph 2

    The Bank of England is one of the oldest central banks, and what it now does

    grew out of its history. It was founded in 1694 to lend money to the new Dutch King

    William, who needed money to fight a war. It was in effect a group of bankers who felt

    more certain of getting their money back if they lent as a group. This illustrates the fact

    that a king or government often needs the support of City bankers, and is to some extent

    dependent on their goodwill and good opinion. To have an official outpost in the City can

    therefore be useful to the government.

    Paragraph 3

    Originally the local banks each issued their banknotes. That probably made the

    banking system more risky, and one of the things the Bank of England did was to keep an

    eye on how well the local banks managed, principally by making sure the loans they

    made were to reputable borrowers. Nowadays the Bank of England has the sole right to

    issue notes in England and Wales; The Scottish and Northern Ireland banks have limited

    rights. However, most money nowadays consists of bank deposits, and the banks are very

    much in the business of accepting deposits and making loans out of them, so they have

    lost nothing important.

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    4. In groups, draw a comparison between The Bank of England and Banca

    Naional a Romniei (The National Bank of Romania) in terms of:

    - bank reserves

    - rate of interest

    - banknotes

    5. Match the term/phrase (1 20) with the right definition (a t):

    1. balance a. a record of transactions in a bank account

    2. bank charges b. a sum deducted from a bank account, as for a cheque

    3. branch c. an instruction to a bank to make regular payments

    4. check(AmE)/ cheque (BrE) d. bank account from which money may be drawn at any time;

    5. checkbook (AmE)/ chequebook (BrE)

    e. bank account on which interest is paid;

    6. credit f. book containing detachable checks

    7. credit card g. (plastic) card from a bank authorising the purchasing of goods on

    credit

    8. current account/ checking account (Am E)

    h. deficit in a bank account caused by withdrawing more money

    than is paid in

    9. debit i. local office or bureau of a bank

    10. deposit account/ savings account (Am E)

    j. money in a bank account; sum added to a bank account; money

    lent by a bank

    11. fill in (Br E)/ to fill out(Am E) k. money lent by a bank etc and that must be repaid with interest

    12. interest l. money paid for the use of money lent

    13. loan m. money paid to a bank for the banks services etc

    14. overdraft n. person to whom money is paid

    15. pay in [paid, paid] o. small document recording money that you pay in to a bank account

    16. payee p. the difference between

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    credits and debits in an account

    17. paying-in slip q. to add written information to a document to make it complete;

    18. standing order r. to deposit or put money in to a bank account

    19. statement s. to take money out of a bank account

    20. withdraw [-drew, -drawn] t. written order to a bank to pay the stated sum from ones account

    And now write a paragraph about a banking service or product using ten of the

    terms above.

    6. Read the following text and fill in the blanks with terms from the box:

    checks/cheques; commercial; credit cards; financial institutions; investment;

    loans; policy; rate of interest; savings; securities

    Traditionally, the principal types of banking are ________(1) and central. In commercial

    banking, business involves borrowing money from individuals, firms and sometimes even

    governments. The banks use this money to make _______ (2), extend credit and invest in

    _______(3). They earn money by borrowing at one _______(4) and lending at a higher

    rate, and by charging commissions and fees for their services. These services include

    ______(5), ______(6), loans, personal wealth management, estate planning, etc. Anyone

    who would want to start a business could apply. Central banks, on the other hand, provide

    services for governments, commercial banks and other ________ (7). Usually they must

    cooperate closely with national governments and often they lead or regulate the national

    banking system by formulating banking _______(8). In addition to such traditional banks

    there are other institutions, such as finance companies, _______(9) banks, _______(10)

    banks, etc. These are often also called banks, but they usually cannot provide all the

    services of commercial banks.

    The banking systems in different countries have many similarities, but also differences.

    The main differences seem to be in organizational details (e.g. unit banking vs. branch

    banking) as well as some banking techniques, although they are becoming less noticeable

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    as international communication improves. Domestic or local banks are now more likely

    to copy practices that have proven successful in other countries. In addition there seems

    to be a trend toward banks merging with or buying out other banks, often forming large,

    international banking institutions.

    Other modern developments of course involve technology, e.g. e-commerce and Internet-

    based banking. Some banks are no longer focusing on local branches. They feel that there

    will be less personal contact with customers in the future since most banking will be done

    online, via the telephone or at ATM machines. Therefore they are closing branches and

    reducing the number of employees involved in direct customer service. It will be

    interesting to see how such developments influence the industry in general.

    7. COMPREHENSION CHECK: Answer the questions on the text above:

    1. What is the role of the government in both central and commercial banking?

    2. What is the main business of commercial banking?

    3. How does a commercial bank succeed in earning money?

    4. What is the difference between traditional banks and the other financial

    institutions?

    5. Are the banking systems similar everywhere in the world? Support your answer

    with arguments.

    6. What is the nowadays trend in banking? Mention some developments in banking.

    7. How does technology affect local branches of international banks and their

    employees?

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    8. Read the following article adapted from The Economist and then write a

    memorandum announcing the appointment of Mr Gavin Governor as Governor of

    The Bank of England.

    GOVERNOR TO BE NEXT BANK OF ENGLAND GOVERNOR

    The contest for the governorship of the Bank of England ended on Wednesday with the

    appointment of Gavin Governor, Deputy Governor for monetary policy, to replace Sir

    Edward King, who retires in seven months time.

    The announcement came as Gordon Lord, the chancellor, sought to reassure financial markets

    that a sharp increase in government borrowing would not be accompanied by any relaxation

    in the Banks efforts to control inflation.

    Mr Governor, 54, an economist who joined the Bank in 1991, was the candidate favoured by

    the City and is respected among central bankers and economists internationally for his

    academic work. He helped in the setting up the Banks inflation targeting regime and, with

    Sir Edward, in arguing the case for monetary independence. Mr Governor also established the

    Banks quarterly inflation reports, which analyse its price projections.

    Mr Governor is regarded as more of a Eurosceptic than the other leading candidates for the

    job, Sir Howard Duke and Andrew Baron. Michael Squire, economist at Citigroup, said the

    selection of Mr Governor ensures that the central bank will be able to face the upcoming

    policy challenges with an experienced head.

    9. LOOK IT UP!

    1. What is the City? Do you know other terms to denote it?

    2. What is the role of a central bank? Could you mention the most important

    departments within a central bank?

    3. Do you know the term denoting a central bank used in the United States?

    4. Give examples of well-known financial centres.

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    PRESIDENT/CHAIRMAN

    10. Study the ORGANIZATIONAL CHART of the Industrial and Commercial Bank of

    Cumbria (ICBC):

    Accounting and Settlement Department

    Administration Dpt.

    Auditing and Supervisory Dpt.

    Corporate Banking Dpt.

    Credit Dpt.

    Private Banking Dpt.

    Treasury Dpt.

    Business Development and Strategy

    Information Technology Dpt. (IT)

    Credit Card Management Dpt.

    E-banking Dpt.

    Housing Finance Dpt.

    Human Resources Dpt.

    Legal Dpt.

    11. Describe the activity of each department using the verbs/phrases listed below,

    according to the model:

    to apply, to appoint, to approve, to assist, to authorise, to be accountable for, to be

    concerned with, to be in charge with, to calculate, to charge, to collect, to compile, to

    consist of, to control, to credit, to deal with, to debit, to deposit, to evaluate, to finance, to

    grant, to instruct, to issue, to record, to recruit, to remit, to report to, to submit, to

    supervise, to transfer

    Model: The Board of Directors is responsible for making policy decisions and

    determining the bank strategy. It appoints a CEO/Managing Director who reports

    directly to the Board. It usually consists of the President/Chairman, the Directors and

    the Heads of Departments.

    Board of Directors

    CEO/ MANAGING DIRECTOR

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    12. Fill in the blanks with the correct preposition:

    1. I hope that you agree . us this matter.

    2. The board arrived the meeting time.

    3. A Japanese reporter has been asking you all morning, Sir!

    4. Most employees believe the success of their strike.

    5. Do you think you can borrow so much money the bank?

    6. Could you change a 100-euro note . 5-euro notes?

    7. The reputed politician did not want to comment the newspapers headlines about

    his latest escapades.

    8. I wonder how the new management team will cope . the recent complaints

    Union members.

    9. Ive read your report but I havent really figured out what it deals .

    10. Seemingly, our economic development depends financial aid from the EU.

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    UNITATEA 4: MONETARY POLICY

    INFO CELL MONETARY POLICY

    The MONETARY POLICY is the central government policy with respect to the

    quantity of money in the economy, the rate of interest and the exchange rate.

    Fill in the following article with a word or group of words extracted from the box

    below:

    fell sharply against

    the euro

    inject liquidity into

    the financial

    system

    foreign assets short term interest

    rates

    monetary and

    fiscal

    bond issues exchange rate economic recovery

    The Yen

    A weakening dollar is perhaps the last thing that the Bank of Japan wants. With domestic

    demand anaemic, Japan perennially relies on exports and overseas production, especially

    of cars and electronics, to keep its economy going. So, throughout May 2003, even as the

    yen (1)___________, the central bank was intervening furiously to keep it from rising too

    far against the dollar.

    Since May 15th, when the yen closed at 116, having hit a 27-month high, the pressure has

    eased. By June, it was back to 119, near the 120 with which the Bank of Japan seems

    comfortable. In trade-weighted terms, thanks to the strengthening of the euro, the yen is

    now weaker than it was when the Iraq war ended in April. Even so, the Japanese prime

    minister said at the G8 summit in Evian that the yen was still too strong against the

    dollar.

    The Bank of Japan may have helped Japans carmakers, but it is offering little solace to

    the rest of the economy. With (2)__________ at zero, the central bank has relied on non-

    traditional measures to (3)__________. For example, it has boosted banks current

    account balances with the central bank. Since March 2003, the Bank of Japan has raised

    its ceiling for these balances by 50%, to 30 trillion yens ($250 billion).

    The Bank of Japan also continues to buy new government (4)__________at a rate of 1.2

    trillion yens per month. This has helped drive the yield on ten-year bonds down by four-

    tenths of a percentage point since the start of the year, to below 0.5%. But the central

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    bank is more aggressive-by, say, buying some of the outstanding stocks of bonds, rather

    than just a portion of new issues, or by buying (5)__________.

    If the Bank of Japan is to conquer deflation, it will have to do more. However, this does

    not really seem to be the central banks goal. Its main concern is to avoid being blamed

    for any large-scale financial collapse. So its officials step in from time to time to reassure

    markets, but do little more. Recently, its officials have been considering a plan to buy

    asset-backed securities in an effort to prop up ailing small firms.

    The Bank of Japan is not short of helpful advice from visitors to Tokyo. Some said that

    (6)__________ manipulation was unlikely to do much good, and advised the Japanese to

    set an inflation target. Others also suggested ways in which the central bank could

    promote inflation and ease worries about the balance sheet. They also stressed the

    importance of using (7)__________ policy in concert.

    Japans central bankers have heard such arguments before, and ignored them. That may

    be one reason why the American specialists pointed not only to Japans structural

    monetary and fiscal problems, but also to its frustratingly slow pace of change. From my

    side of the ocean one of the analysts said, it seems that many people are looking to the

    United States to take the responsibility for leading the world into (8)__________.

    2. Read the text again to state which of the following are true and which are

    false:

    a. Lately, Japan has been relying essentially on domestic demand. (F)

    b. The yen is now weaker, just because of the euro financial evolution

    c. The aggressiveness of the central bank is manifested only by buying some of the

    outstanding stocks of bonds.

    d. Some foreign advisors stated that the Bank of Japan should use monetary and

    fiscal policy in concert.

    3. In groups, discuss the following issues, considering the financial realities of

    your country in comparison with those stated above about the Bank of Japan.

    a. The role of the exchange rate manipulation in the financial/monetary policy of

    Romania

    b. What strategies would you suggest for the Romanian economic recovery?

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    UNITATEA 5: THE INDICATIVE MOOD 2. NUMERALS. PRACTICE

    1. In pairs, find the questions for the following answers:

    a. The last time I went to a bank was last week.

    b. I wanted to open an account.

    c. It was a current account.

    d. Yes, I asked about that possibility, but I hope Ill never overdraw.

    e. Well, they also offered to open a deposit account for me, to issue a banking card on

    my name, to transfer money from my account to wherever I wanted to, to exchange

    whatever currency I needed, to lend money to me and many others.

    2. Go through the text again and underline all the verbs in the Past Tense Simple.

    Then fill in the table below with all three basic forms of those verbs. An example has

    been written for you.

    Basic forms of verbs extracted from the text

    Short Infinitive Past Tense Past Participle

    Ex. grow grew grown

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    Write an article for the local paper, in which to describe the services Romanian

    banks used to offer a couple of years ago in comparison with what they offer now.

    3. In the following sentences the numerals have been mixed up. Find their right

    place and then translate the sentences into Romanian.

    a. After 2-nd years of courtship and then rejection by a string of suitors, the American

    Stock Exchange (Amex) has finally found a mate.

    b. On June 110, GTCR Golder Rauner, a Chicago investment firm, agreed to buy the

    Amex for $ 2m from the NASD1.

    4. Here are some phrases using numbers in payments. Match the phrases on the left

    with the figures on the right.

    1 We speak of a gross profit of 16% a. nine five seven stroke twenty four M.

    2. The interest charges will be of $ 5.40 b. the seventeenth of August nineteen

    ninety seven

    3. You will get an annual interest rate of c. sixteen per cent

    1 NASD= The National Association of the Securities Dealers

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    2.7%

    4. Check the invoice No. 957/24M d. five point forty

    5. It was on the 17th of August 1997 e. two point seven per cent

    6. The profit is 2, 312, 000 f. two million three hundred and twelve

    thousand pounds

    5. Project work

    You want to start a business and you need a loan from the bank. In pairs, work on

    your file for the bank. You will have to include the following items:

    a. feasibility plan, containing information about

    - business aim

    - business field/profile

    - products/services

    - partners (if any)

    - location

    - foreseen profits

    b. guarantees- stable job or/and properties, real estate, endorsers.

    c. references

    INFO CELL THE FEDERAL RESERVE

    In the 1913 United States of America, the Federal Reserve System, which serves as the

    nation's central bank, was created by an act of Congress. The System consists of a seven

    member Board of Governors with headquarters in Washington, D.C., and twelve

    Reserve Banks located in major cities throughout the United States.

    Responsibilities: The primary responsibility is the formulation of monetary policy,

    affecting the cost and availability of money and credit in the economy. The Board of

    Governors sets reserve requirements and shares the responsibility with the Reserve

    Banks for discount rate policy.

    In addition to monetary policy responsibilities, the Federal Reserve Board has regulatory

    and supervisory responsibilities over banks that are members of the System, bank

    holding companies, international banking facilities in the United States, foreign

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    activities of member banks, and the U.S. activities of foreign-owned banks. It plays a key

    role in assuring the smooth functioning and continued development of the nation's vast

    payments system.

    Governors also discuss the international monetary system with central bankers of

    other countries and are in close contact with the heads of the U.S. agencies that make

    foreign loans and conduct foreign financial transactions.

    6. Complete the table below using previous information on central and domestic

    banks:

    CENTRAL BANK DOMESTIC BANK

    RESPONSIBILITIES

    SERVICES/

    OPERATIONS

    CLIENTS/

    PARTNERS

    INFO CELL E BANKING

    On-line banking is a service provided by many banks and credit unions that allows you to

    conduct banking transactions over the Internet using a PC, mobile phone. You may be

    able to:

    Access account history

    Access accounts 24/7

    Apply for mortgage or personal loans electronically

    Live chat with customer support

    Receive and pay bills on-line

    Schedule on-line standing orders

    Track real time stock quotes

    Trade stocks and mutual funds

    Transfer funds between accounts

    View account balance

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    7. Read the following article and underline the terms and phrases referring to

    banking:

    THE ORIGINS OF ELECTRONIC BANKING

    The advent of the Internet and the popularity of PCs presented both an opportunity and a

    challenge for the banking industry. For years, financial institutions have used powerful

    computer networks to automate millions of daily transactions; today, often the only paper

    record is the customers receipt at the point of sale. Now that its customers are connected

    to the Internet via PCs, banks envision similar economic advantages by adapting these

    same internal electronic processes to home use. Banks view on-line banking as a

    powerful value-added tool to attract and retain new customers while helping to

    eliminate costly paper handling and teller transactions in an increasingly competitive

    banking environment.

    Mouse clicks are replacing face-to-face transactions. Web pages can look just as good

    and work as well for a small community credit union as they do for some of the worlds

    largest financial institutions. Some experts believe newcomers including small, virtual

    banks will lead the way with new and innovative banking styles. In fact, smaller

    institutions have several advantages in the on-line banking arena due to their lower

    infrastructure costs. Because they are not spending as much on housing for existing

    product delivery, they can offer customers better deals like: free checking and savings

    accounts with higher interest rates.

    Internet users seek for convenience when they go on-line to find varied information

    ranging from political news to holiday gifts. 32 per cent of Internet users have now done

    their banking online and 15 per cent have made a travel purchase on-line. It is likely that

    convenience is not the only factor driving the popularity of e-banking. Some customers

    are using the Internet to save money. One on-line bank, NetBank, now charges $3 for

    each paper statement and many companies are strongly encouraging their customers to

    accept electronic billing. Some corporations reward on-line consumers with special

    discounts and enjoy the benefits of increased traffic to their web sites. In both cases, the

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    industry is educating consumers about Internet transactions by making them pay for off-

    line equivalents for the same banking services.

    Success means dealing with old issues in new ways and creating solutions that connect

    tradition to innovation.

    8. COMPREHENSION CHECK:

    1. What was the reason for the spread of on-line banking?

    2. Why is on-line banking important for banks?

    3. What costs are eliminated in e-banking transactions?

    4. Who are the newcomers in the banking industry? What advantages do they have?

    5. What are the factors that add to the popularity of e-banking?

    9. Translate into Romanian, choosing the appropriate version:

    1. On December 9th, the airline said that actually it had debts of $875m that were due at

    the end of the year.

    a. Compania aerian a anunat pe 9 decembrie ca are de fapt datorii de 875 milioane

    de dolari, scadente le sfritul anului.

    b. Pe 9 decembrie, liniile aeriene au spus c n prezent aveau datorii de 875 milioane

    de dolari din cauza sfritului de an.

    c. Pe 9 decembrie, compania aerian a spus c la acel moment avea datorii de 875

    milioane care erau datorate la sfritul anului.

    2. Last year, the company lost a record of $2.1 billion; this year it is to lose even more.

    a. Anul trecut compania a pierdut o nregistrare de 2.1 milioane de dolari, anul

    acesta va pierde mai mult.

    b. Anul trecut compania a nregistrat pierderi record n valoare de 2,1 miliarde de

    dolari, iar anul acesta, cu siguran va pierde mai mult.

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    c. Compania a pierdut anul recut recordul de 2.1 milioane de dolari iar anul acesta

    va pierde mai mult.

    3. The directors had already spoken to banks about borrowing money should the airline

    enter chapter 11 bankruptcy law.

    a. Directorii au vorbit deja cun bnci despre mprumutul de bani dac va intra

    compania aerian n capitolul 11 al legii falimentului.

    b. Directorii discutasera deja cu unele bnci despre un potenial mprumut n cazul n

    care compania aerian ar intra sub incidena capitolului al 11-lea din legea

    falimentului.

    c. Directorii discutaser deja cu unele bnci despre un mprumut dac cumva

    compania aerian va intra sub incidena capitolului al 11-lea din legea

    falimentului.

    10. Match the phrases (1 10) to the appropriate explanations (a j):

    1. cost a. A bank that provides most consumer transactions via the Internet.

    2. customer service b. A bank with branches, tellers and ATMs. Many traditional banks now offer online banking and

    online bill payment services.

    3. fund business c. A monthly charge for online bill payment services. Many banks offer this as a free service

    to account holders.

    4. online share dealing d. An individual client can submit the application for pledge loan and obtain the result of the

    application online.

    5. personal pledge loan e. An Internet and telephone share dealing service where customers buy and sell shares.

    6. traditional (brick-and-mortar) bank

    f. Clients (fund investors) can perform fund subscription, purchase and redemption as well

    as inquiry of funds-related information online.

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    7. treasury bond business g. Clients of personal treasury bond investment can trade treasury bond online in real time.

    8. virtual (internet) bank h. The customer can change his logon password, card or customer information on-line.

    9. WAP Mobile Phone Banking

    i. This is the on line banking service for the customers provided through mobile phones.

    10. Web Site Address Hotlink

    j. Users click on it to go to the bank's home page on the Internet.

    11. CASE STUDY: Look at the table below to choose the appropriate bank for the

    following four people. Explain your choice:

    Sarah Johnson, married and mother of 2 children, owns a small business. She has to pay

    an important number of bills every month both for her household and business. Time is

    essential for her. She intends to open an account with a bank.

    William Windows, single, is a salesperson for a big software distribution company. He

    travels extensively and wants an account that could take over the job of paying bills. He

    is a cell phone and laptop addict. He needs unlimited access to his account and the

    possibility to withdraw money from any location.

    Oscar Rottenn, retired, has a bad health condition that prevents him from leaving his

    house for a long period of time. He wants to put some money away. Despite his age, he is

    very open-minded.

    Sonny Hearst Jr., 21, is a student and a part-time waiter at the campus cafeteria. He

    wants to open an account with a bank to receive his paycheck and to pay his tuition

    directly from this account.

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    Brick-and-Mortar Banks

    Institution Interest-Bearing Accounts ATM

    Fees Online Bill Payment

    Bank

    Minimum

    Deposit /

    Interest

    Rate

    Monthly Fee

    Credits

    for Other

    Banks'

    ATM

    Fees

    Cost / Number of Monthly

    Payments

    Bank of

    America

    $100 /

    0.40% $10.00 No credits $5.95 / Unlimited payments

    Chase

    Manhattan

    Bank

    $100 /

    1.00% $5.95 No credits Free / Unlimited payments

    U.S. Bank $1,000 /

    1.26% $3.50 No credits $5.95 / 15 payments

    Virtual Banks

    American

    Express

    $100 /

    1.98% $8.00

    4 per

    month

    ($1.50

    maximum

    each)

    Free / Unlimited payments

    nBank $100 /

    5.32% $15.00

    Up to $6

    per month $4.50 / 5 payments

    NetB@ank

    $50 /

    3.00%-

    3.93%*

    0-$4.40 No credits Free / Unlimited payments