Activity Read the information given in A, B, c sections and translate words and word combinations

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Banking matters

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• Activity 4. Make word combinations using a word from each box. One word can be used twice. Then use the word combinations to complete the sentences below. Look at А , В and
• Activity 5.Complete this paragraph using these words

bank currency exchange financial monetary

markets run system policy rate stability

Activity 4. Make word combinations using a word from each box. One word can be used twice. Then use the word combinations to complete the sentences below. Look at А, В and С sections to help you.

1.……………… ………….., including setting interest rates, is designed to maintain………….. …………….. .

2.If there's a ………….. ………….and the bank goes bankrupt, this can have a rapid effect on the whole ……………. ……………… .
3.On one day in 1992, the Bank of England lost over £1 billion (more than half of the country's foreign reserves) in the ………… …………… , trying to protect the …………. ……………of the pound.

Activity 5.Complete this paragraph using these words:
Assets cash interest liquid maturity reserve

Because a commercial bank can lend most of the money deposited with it to other borrowers, who in turn may lend it to another borrower, each sum of money deposited in a bank is multiplied several times. To ensure the safety of the banking system, central banks impose (1)........................requirements, obliging commercial banks to deposit a certain amount of money with the central bank at zero (2)............ .Central banks in different countries also impose different "prudential ratios" on commercial banks. These are ratios between deposits and liquid (3).......................that are considered sufficient to meet demands for (4).................... . A bank's assets are its loans, which should, in theory, all be paid back one day, and its liabilities are the customers' deposits, which can all be withdrawn one day.) For example, a bank's capital ratio is between its capital and reserves on the one hand, and its total assets on the other. The reserve asset ratio is between deposits with a (5)..........................of under two years, called "eligible liabilities," and reserve assets, which include cash and assets that are (6).......................... i.e. quickly convertible into cash - such as reserve deposits held by the central bank, and securities such as treasury bills.

Discussion
Is the central bank in your country independent from the government? What powers and responsibilities does it have?

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