Banking matters Activity A. Current accounts

Unit: Central banking (The Bank of England)
Warm up

• 
  What are the functions of a central bank?
  

Responsible for monetary policy, supervises and supervises the banking system, issues currency, prints banknotes, fixes the minimum interest rate, controls the money supply, act as a lender of last resort

• 
  How can the actions of a central bank affect individuals as well as companies?
  

The central bank controls inflation in the country, prevents commercial bank failures, and controls interest rates on loans and deposits through the refinancing rate.

Activity 1.
A.Which of the following would you expect a central bank to do? Mark them A = always, S = sometimes, or N = never.

1. 
   act as banker to the government and the commercial banks = A
   
2. 
   attempt to influence the exchange rate = A
   
3. 
   clear cheques between commercial banks = S
   
4. 
   decide the country’s minimum interest rate =A
   
5. 
   decide all of a country’s interest rates = N
   
6. 
   issue banknotes =A
   
7. 
   issue securities for companies = S
   
8. 
   issue securities for the government =A
   
9. 
   keep minimum deposits of commercial banks’ reserves = A
   
10. 
    lend money to banks in difficulty = A
    
11. 
    lend money to small businesses = N
    
12. 
    maintain financial stability = A
    
13. 
    manage reserves of gold and foreign currencies = A
    
14. 
    manage the assets of wealthy individuals = A
    
15. 
    publish monetary and banking statistics = A
    
16. 
    supervise the banking system = A
    

B.You are going to read about the major functions of the Bank of England. Before you read, check your understanding of the words (1-9) below by matching them with their definitions (a-i).

1. 
   policy- c an agreed plan of what to do
   
2. 
   threats - c an agreed plan of what to do
   
3. 
   oversight- h supervision
   
4. 
   target- a a level or situation which you intend to achieve
   
5. 
   core (adjective)- d basic and most important
   
6. 
   sound (adjective)- e in good condition
   
7. 
   sterling- i the name of the British currency
   
8. 
   inflation- b a general, continuous increase in prices
   
9. 
   remunerated- f paid