Industry, services and commerce is conducted on credit, and firms may provide small discounts on

accounts settled within, say, one month — and (c) bank credit: credit consisting of loans and overdrafts

to a bank’s customers.

Credit enables a producer to bridge the gap between the production and sale of goods, and

a consumer to purchase goods out of future income. Bank and other kinds of credit form part of the

money supply and have considerable economic importance.

12.7.1.3. Read the text “Credit Guarantee Practice” and translate it in written form.

Credit Guarantee Practice

Credit as an Economic Concept

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12.7.1.5. Read the text “Central Banks: Their Powers and Functions.” Enumerate the functions

performed by different central banks.

All developed and most developing countries have a central bank that is responsible for exercising

control of the credit system, sometimes under instruction from government and, increasingly often,

under its own authority. Central banks typically execute policy through their lead role in setting shortterm

Interest rates which they control by establishing the rate at which loans of last resort will be

made. Some central banks also use other devices to control money supply, such as special deposits.

With an increasing consensus that monetary policy plays an important part in determining aggregate

demand, the stability of the business cycle and the rate of inflation, central banks have

found themselves in an increasingly central role in economic management. The success of those

which operated at arm’s length from political authority — notably in the USA and Germany (Bundesbank)

— has led other nations to follow in granting independence. The premisses are that the

temptation to engage in overheating will be diminished if monetary authorities do not have to face

an election every few years; and that credibility of policy will be greater if a bank is in charge. Some

Independent central banks have more power than others. In Britain, New Zealand and Canada,

the central bank essentially decides on the level of interest rates, but does so to aim at an inflation

target set by the government. In Germany, and indeed in the constitution of the European Central

Bank governing European Monetary Union, the bank sets its own target.

The power of central banks led one commentator in 1996 to assert the western world was in the

grip of central bankism in reference to the orthodox values most represent. Apart from their function

of making broad economic judgements, central banks, such as the Bank of France, the Federal

Reserve Bank and the Bank of Canada, control the note issue (banknote), act as the government’s

bank, accept deposits from and make loans to the commercial banks and the money market,

and conduct transfers of money and bullion with central banks in other countries.

Vocabulary Notes to Text 12.7.1.5

1. bullion — золотой слиток

Central Banks: Their Powers and Functions

12.7.2. Match the following terms with the correct definition

Work with a partner.

2. liabilities3. loan4. loanable funds5. loan capital

b) It is the borrowing of a sum o )seop .1ditfa moneyehsT iltsacebhnouw saedgho iltrsaebdnom t)rsaebnoum ,.iltfrsacednopuyTm

lt-fao iltfrsacedhnpuv raebho il(rsacedknov rsbu isebdy

ac lredhnov.ahr by one person, company,

government or other organization from another. Loans

may be secured or unsecured (securities), interest-bearing or

interest-free, long-term or short-term, redeemable or irredeemable.

c) By it we mean fixed-interest borrowed funds. Alternative term

for debentures.

d) It is the money available for lending in financial markets. It

consists of current saving, dishoarding and any increase in

the money supply, for example, credit creation by the banks.

e) It is the money placed in an account at a bank and constituting

a claim on the bank. The term “bank deposit” includes

deposits on all types of account, including current accounts.

173

12.7.3. Read the text, complete it using the words from the box, and translate it into Russian

trade bills, commercial banks, written instructions, payee, accounting procedures,

benefits, payments

Credit transfer, or giro is a system in which a bank or post office will transfer money from one

account to another on receipt o f .......(1). Several accounts, e.g. households o r .........(2), may be

included in a list which must state the location or account numbers of the ... (3). Standing orders

for giro transfer of regular ... (4) may be made. Credit transfers, which have been used by post

offices in continental Europe for many years, were first introduced into Britain by th e .......(5) in

1961 and the Post Office in 1968. ... (6) to the customer include the saving on stamp duty payable

on cheques (since abolished in Britain) and economies i n .......(7), though banks may make a

charge for each item transferred.

12.7.4. Written/Oral Practice

Make up sentences and microdialogues with the following word combinations on the subject of the

unit. Work with a partner.

а) кредит, предоставление кредита — credit, lending

revolving credit — возобновляемый кредит

interfirm (intercompany) credit, intercompany

bank (banking, banker’s) credit, bank loan — межфирменный (banking кред)ит

lending, banking accommodation — u nlim itedб crediаt — неогракниченоный вкредит

ский кредит

secured credit — обеспеченый кредит

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open (grant, give, establish, lodge) a credit exced a credit, overdraw an acount— превы—

открывать кредит шать ерди тк

repay (cancel, call in, redeem, reimburse) a credit

— погашерд sиы тк t— icerасяпdьердт ltелao арть кредитa ерд—ерди ,асчпи tткод icerd sтекniagtв

use a credit, enjoy credit facilities — пользо-