Unit 9 (Central Banking) [PDF]

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UNIT 9 . CENTRAL BANKING Lead in  What are the functions of a central bank ?  Central bank control and manipulate the money supply  Cental bank regulate member banks through capital requirement,reserve requirements, and deposit guarantes,omong other fools  Central bank also acts as on emergency render to distressed commercial banks and other institutions and sometimes even a government  How can the actions of a central bankaffect individuals as wellas companies ? Discussion Which of the following would you expect a central bank to do? Mark them A= always, S = sometimes, or N = never. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.



act as banker to the government and the commercial banks (A ) attempt to influence the exchange rate (A) clear cheques between commercial banks (S) decide the country's minimum interest rate (A) decide all of a country's interest rates (A) issue banknotes (A) issue securities for companies (N) issue securities for the government (A) keep minimum deposits of commercial banks' reserves (A) lend money to banks in difficulty (S) lend money to small businesses (N ) maintain financial stability (A) manage reserves of gold and foreign currencies (A) manage the assets of wealthy individuals (N) publish monetary and banking statistics (A) supervise the banking system (A)



Vocabulary 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 [s -i]. 1 2 3 4 5 6 7 8 9



policy threats oversight target core [adjective] sound [adjective] sterling inflation remunerated



(c) (e) (g) (a) (d) (h) (i) (b) (f)



a a level or situation which you intend to achieve b a general, continuous increase in prices c an agreed plan of what to do d. basic and most important



e f g h i



in good condition paid potential sources of danger supervision the name of the British currency