Vocabulary:

Intrinsic – внутренний

To be worth smth- стоить

Face value = nominal value номинальная стоимость

To subsume- включаьь в категорию

Read and translate the text:

Functions of money.

1. What is the most important function of money?

2. What does the roleof money depend on?

3. What are the three functions of money?

4. What is the primary task of central banks all over the world?

People accept money in exchange for goods and services. But the role of money depends on the state of development and economy. Money has become an essential element of economies based on the devision of labour, in which individuals have specialized in certain activities and enterprices have focussed on manafacturing specifec goods and rendering specific cevices. In order to make transactions as simple and evident as possible, the introduction of a generally accepted medium of exchange suggested itself.

Money performs the function of of a medium of exchange or means of payment with goods being exchanged for money and money for goods. At the same time it also acts as a unit of account.

Money is a store of value, as a part of individual ‘s income it may be set aside for future conuption.

These three functions of money - medium of exchange, unit of account and store of value can only be fulfiled if othere is a great confidence in its stability of value. Safeguarding monetary stability is the primary task of central banks all over the world. Moreover, the central bank has the function of regulating money supply in order to guarantee a smooth functioning of the monetary system.

Vocabulary:

Division of labour – разделение труда

Efficient – эффективный

Medium = means средство

Consumption – потребление

To safeguard = to ensure обеспечить

Smooth - ровный, плавный

7.4. Currencies. Pounds and Pence, Dollars and Cents.

The basic unit of British currency is the pound. One pound is 100 pence. There are eight different British coins : there are one-pence coins, two-pence coins, five-pence coins, ten-pence coins, twenty pence coins and fifty-pence coins. There are also one-pound coins and two- pound coins. Then there are five – pound notes and fifty- pound notes.

The basic unit of American currency is, of course, the dollar. One dollar is 100 cents. There are five different coins : there are one-cent coins, five-cent coins , ten-cent coins, twenty five cent coins and fifty-cent coins. There are one-dollar notes, five dollar notes. Ten-dollar notes, twenty-dollar notes and one –hundred-dollar notes.

Usually the exchange rate is about one and a half dollars to the pound.

Note: Американцы называют « купюру» словом bill , поэтому в США принято говорить one-dollar bills, five-dollar bills, etc..

• Обратите внимание , что говорится I’ve got five pounds, but I’ve got a five-pound note.

The Exchange Rate.

Interest rates affect domestic monetary conditions and thus borrowing, consumer demand, investment, output and ultimately pri ces. They can also have an effect on the value of sterling in terms of foreign currencies. Other things being equal, higher interest rates will tend to attract foreign funds into serling, and thus increase the sterling exchange rate against other currencies.

Foreign exchange markets can also be affected by official operations.Management of the UK’s gold and foreign exchange reserves is carried out by the Bank on behalf of the Treasury. The reserves are held in a governmentaccount called the Exchange Equalization Account, which was set up in 1930s after Britain left the gold standard : its purpose was and remains to check undue fluctations in the external value of sterling. This process, known as intervention, involves the Bank buying sterling in exchange for foreign currencies when it wants to curb a fall in sterling – or alternatively selling sterling if it wants to curb it rise.