Comprehension and Discussion Questions. 1. Can you positively estimate on-line retail banking on the Internet?

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1. Can you positively estimate on-line retail banking on the Internet?

2. Which is more effective on-line or traditional banking?

3. Is an on-line banking transaction expensive?

4. Which type of banking transaction do you use?

5. What are the services of on-line banking?

6. What new technologies do we expect to come in future?

7. Can you compare the method of bill payment with the Internet based bill payment?

Practical Task:

Read through text IV and make up a short summary of it using topical sentences of paragraphs for the purpose.

Text V. London’s role as a financial Centre

He’s merchant-bank Bertie, who sets off at 6.30, and a dapper, well-heeled fellow he is, to be sure. Yet he crowds, with thousands of others, into a shabby train or bus headed for the City of London. They will all swarm through damp, grimy streets to their skyscrapers to do what? To cluster in some of the world’s most expensive office space, to stare at flickering screens and pore over pages of numbers, and to talk on the telephone to other disembodied voice about this deal and that price.

Bertie’s business has its ups and downs, but why does he do it in London? Much the same can be asked about New York and Tokyo, the other financial centres, now that computers, satellites and an end to capital controls have made money mobile. Yet only London is worrying about its future as a financial capital.

London is right to worry. Of the three main financial centres, its position is the most fragile. In New York and Tokyo a small amount of international finance is perched on a vast domestic market. In London, it is the other way around. The businesses it attracted in the past 30 years could as easily be done in New York, Tokyo or elsewhere.

In five short years, Tokyo has managed to wrest leadership of international bank-lending away from London. And then there is continental Europe, where Paris and Frankfurt are on the up. For the first time in centuries, London has rivals in continental Europe.

Its easiest defence starts with the earth’s rotation. Yes, some international business might revert to America or Japan, but until the world’s Berties give up both sleep and dinner, there will be trading and other deals in the European time zone. For that business, London’s rivals are still far behind. But this begs another question. Why have a centre at all?

Communication is now cheap and reliable, making it easy to trade, borrow and invest from the warmth of southern France or the cheapness of Glasgow. Businesses in which people have to see the whites of each other’s eyes – such as mergers advice – might have to stay in finances inner cities. Others do not.

Vocabulary notes

a dapper – щеголь

shabby– поношенный жалкий

to swarm – толпится

to cluster – собраться группами

to flicker – мерцать, мигать

to pore over – сосредоточенно изучать

disembodied – чужой, неодушевлённый

fragile – неустойчивый

to perch – оседать

elsewhere – в других местах

to wrest – вывести, вытянуть

to revert -возвращаться

rivals – соперники

to give up – бросить, отказаться

reliable – надёжный

cheapness– дешевизна

Comprehension and Discussion Questions

1. Are the main customers of merchant banks private individuals?

2. Does the writer show approval of how people such as Bertie work?

3. If something such as a business has its ups and downs, is it, on the whole, OK?

4. Why is the earth’s rotation important?

5. “International business might revert to America or Japan” means that it might

a) go there, or

b) return there?

6. If a statement begs a question, has the question already been answered?

7. Why do people need to see the whites of each other’s eyes when discussing mergers?

Text VI. Case study

Assume that farmer Mr. Brown needs $6,000 to buy seed and fertilizer and to pay wages to laborers he must hire to work his farm. Assume further that he does not have the cash he needs, so he goes to the only bank in his community to borrow funds.

The bank loan officer tells Mr. Brown that if he wants a loan, he must put up collateral – property that is pledged by a borrower to protect the lender’s investments. Mr. Brown has equipment valued at $ 10,000, so he pledged this as collateral for a $ 6,000 loan. To protect itself, a bank generally requires collateral in excess of the amount borrowed. If the loan is for 1 year, Mr. Brown signs a note payable to the bank stating that he will repay the $6,000 plus 12 percent interest ($720) at the end of the year.

If the bank were to give Mr. Brown $6,000 in currency, he could easily buy the goods and services needed since people would accept the currency without question. But if it were to do so, the bank would restrict its own ability to make loans and thus to make profit in the form of interest income. Suppose that the bank has $100,000 in cash reserves. If it lends all this money at 12 percent interest, it will make only $ 12,000 per year in interest. This limitation led banks to search for a more profitable method of lending money.

If Mr. Brown comes to the bank today to borrow $6,000, the bank, instead of giving him the loan in the form of cash, will grant the loan by creating a derivative deposit for him. Mr. Brown then writes checks against the created checkable deposit. These checks, which are drafts against the bank to pay the bearer a stimulated amount, serve as money. People usually accept them in good faith in exchange for goods and services. Thus, the money supply increases to the extent of checkable deposits created. Since the bank does not lend currency, it might seem able to make an unlimited number of loans in the form of checkable deposits. However, it has to keep sufficient cash on hand to provide for those who want to redeem the checks.

Vocabulary notes

collateral [kə'lætərəl] –обеспечение краткосрочного долга

to put up collateral– обеспечить залог

to pledge –закладывать, отдавать в залог

lender –кредитор, заимодатель

loan –заём, ссуда

to sign a note payable to the bank –подписать банку вексель к оплате

cash reserves –резерв наличных денег

derivative deposit –производный депозит (образованный за счёт кредита)