CENTRAL BANKING PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 23. CENTRAL BANKING

 

A The functions of central banks A journalist is interviewing Professor John Webb, an expert in central banking. What are the main functions of central banks? Well, most countries have a central bank that provides financial services to the government and to the bank system. If a group of countries have a common currency, for example the euro, they also share a central bank, such as the European Central Bank in Frankfurt. B The central bank and the commercial banks. How exactly does the central bank supervise the commercial banks? Well. Commercial banks have to keep reserves – a certain amount of their deposits – for customers who want to withdraw their money. These are held by the central bank, which can also change the reserve – the minimum percentage of its deposits a bank has to keep in its reserves. C Central banks and exchange rates What about exchange rates with foreign currencies? Central banks manage a country’s reserves of gold and foreign currencies. They can try to have an influence on the exchange rate – the price at which their currency can be EXERCISES 23.1 Match the two parts of the sentences. Look at A and B opposite to help you. 1 The central bank will sometimes lend money 2 Banks would probably start taking too many risks 3 Central banks are usually responsible for 23.2 Complete the text from the website of the Federal Reserve, the central bank of the United States. Look at A opposite to help you. Today the Federal Reserve’s duties fall into four general areas: 23.3 Make word combinations using a word from each box. One word can be used twice. Then use the word combinations to complete the sentences below. Look at A, B and C opposite to help you. 1 _________ _________, including setting interest rates, is designed to maintain _________ _________. 2 If there’s a _________ _________ and the bank goes bankrupt, this can have a rapid effect on the whole _________ _________.

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