ENGLISH FOR

BUSINESS
COMMUNICATION

A Course for 1st Year Distance Learning Students

(The Faculty of Finance, Insurance, Banking and
Stock Exchange)

The ENGLISH FOR BUSINESS COMMUNICATION course is designed for 1st

year students of the Faculty of Finance, Insurance, Banking and Stock Exchange
enrolled in the Distance Learning Programme.
The aim of the course is to develop integrated communication skills in English, thus
enabling the students to develop their comprehension skills, as well as to present ideas
clearly on a variety of financial and business topics.

COURSE OBJECTIVES:

The main course objectives are:

o to help students revise vocabulary structures;

o to familiarize students with financial and business concepts;
o to develop students comprehension of business and economics texts;
o to improve students ability to discuss financial matters;
o to develop students oral and written communication skills;
o to develop study and self-assessment skills.

COURSE STRUCTURE:

The course is structured into 5 units, each of which has a self-assessment test and test
key appended to it.

STUDENT ASSESSMENT:

The course provides 2 categories of assessment tools:

o end-of-unit self-assessment tests;
o tests administered by the professor.

GRADING:

o two professor-administered written tests: 50%;

o homework file: 50%.

COURSE REQUIREMENTS:

o deadlines for homework files and self assessment-tests submission will be

rigorously met;
o plagiarism and dishonesty will result in a zero (0) for that particular test paper/
homework file.

CONTENTS
Unit 1

Unit 2

Unit 3

MARKET ECONOMY

...

Objectives
Lead-in
Vocabulary development
Self-assessment test
Key
Bibliography

...
...
...
...
...
...

4
4
6
9
10
11

FINANCIAL ACCOUNTING

...

12

Objectives
Lead-in
Reading comprehension
Vocabulary development
Self-assessment test
Key
Bibliography

...
...
...
...
...
...
...

12
12
13
15
17
18
20

MONEY FORMS AND ...

21

FUNCTIONS

Unit 4

Unit 5

Objectives
Lead-in
Vocabulary development
Self-assessment test
Key
Bibliography

...
...
...
...
...
...

21
21
23
25
27
28

BANKING SERVICES

...

29

Objectives
Vocabulary development
Self-assessment test
Key
Bibliography

...
...
...
...
...

29
29
31
32
32

OF ...

33

CLASSIFICATION
BANKS

Objectives
Vocabulary development
A. Wholesale and Retail Banks
B. Central Banks
Self-assessment test
Key
Bibliography

...
...
...
...
...
...
...

33
33
33
35
36
37
38

UNIT ONE
MARKET ECONOMY

OBJECTIVES:

This unit will help students to:

o become familiar with basic economic concepts

o be able to describe the differences between market economy and centrally
planned economy

LEAD-IN

1. Read the explanations below.

A market economy is a type of economic system in which the trading and exchange
of goods, services and information takes place in a free market. Since free markets are
governed by the law of supply and demand, the market itself will determine the price
of goods and services, and this information will be made available to all participants.
Businesses can decide which goods to produce and in what quantity, and consumers
and businesses can decide what they want to purchase and at what price.

The opposite of a market economy is a planned economy, where the government

decides what to produce, in what quantity, and to be sold at what price. In a
command economy or planned economy, the central or state authorities regulate
various factors of production. In fact, the government is the final authority to take
decisions regarding production, utilization of the finished industrial products and the
allocation of the revenues earned from their distribution.

(adapted from www.economywatch.com)

4

2. The box below contains words or phrases that are associated with market
economy or centrally planned economy. Place the words or phrases under the
appropriate heading in the table. Add other characteristics that you can think of
based on the explanations above and/ or on your previous knowledge.

badly managed enterprises; bankruptcy of unprofitable companies; competition;

competitive management of enterprises;
employment of staff according to real necessities;
intolerance of low quality of goods and services; merging of companies; overstaffing;
private ownership; state ownership; subsidising of unprofitable companies;
unemployment.

Market economy

Centrally planned economy

VOCABULARY DEVELOPMENT

1. Match the following words/ phrases/ concepts with their equivalents listed
below:

1. Bankruptcy
2. Competition
3. Consumer
4. Demand
5. Entrepreneur
6. Investment
7. Laying off
8. Market share
9. Monopoly
10. Owner
11. Profitability
12. Property
13. Setting
14. Subsidy
15. Supply
16. Unemployment

a. a market where there is one single seller;

b. a payment made by a government to unprofitable companies;
c. an economic situation in which people willing to find jobs are not able to get
them;
d. an individual who supplies goods or services to the market for making a profit;
e. dismissing; making redundant;
f. establishment; fixing of;
g. one of the market forces which can cause a drop in the price of certain goods if
it is dominant;
h. one of the market forces which can cause an increase in the price of certain
goods if it is dominant;
i. rivalry between suppliers providing goods or services for a market;
6

j. someone who has the right over property;

k. something capable of being owned;
l. the end user of a product;
m. the percentage of total sales of all brands competing in the same market held
by a specific brand;
n. the placing of monetary resources into the creation of assets in order to
produce goods;
o. the return on capital employed that a company gets on a market;
p. the state of an individual or company who has become insolvent and is
deprived by a court of his/ their property.

10

11

12

13

14

15

16

2. Fill in the gaps with the suitable form of the words in the box. There are more
words than you need.

bankruptcy; competition; consumer; demand; entrepreneur; investment; laying off;

market share; monopoly; owner; profitability; property; setting; subsidy; supply;
unemployment.

Market economy is characterized by private ___________(1) over the

economic resources. The private ___________(2) may obtain, control, employ and
dispose of property and resources as they see fit. This type of property rights
encourages ___________(3), innovation, exchange and economic growth.
Freedom of enterprise and of choice are closely linked to private property in a
market economy. That means there are no artificial obstacles imposed by government
to an ___________(4)s choice to enter or leave a particular industry or market; it also
signifies that workers are free to work wherever they choose according to their skills,
and most important of all, ___________(5) are free to buy, within the limits of their
incomes and money resources, the goods and services that are most appropriate for
meeting their needs. The consumer ultimately decides what should be produced in an
economy.

___________(6) is a fundamental feature of market economy. This implies the

existence of a large number of buyers and sellers operating in a market for a particular
product or resource. Each of the competitors tries to obtain as big a ___________
___________(7) as possible to the detriment of the other competitors. The fact is of
fundamental importance for the quality of goods and services supplied, for if
consumers are dissatisfied with the assortment or quality supplied by a company, they
switch over to a competitor. This means loss of market share hence a loss of
___________(8), and if the management is unable to find a solution it might lead to
huge losses so that unprofitable companies face ___________(9). Company
management when faced with lower demand from consumers often has to increase
productivity by laying off idle workers, a fact which gives rise to ___________(10).
There is no government interference for the ___________(11) of prices, which
are the outcome of the interaction of ___________(12) and demand.
In a command economy state property is dominant. The state actively
interferes in the setting of prices and instead of competition there is
___________(13). Unprofitable enterprises get state ___________(14), so there is
practically no bankruptcy. Therefore unemployment is not usual in a command
economy, as there is no real reason for increasing productivity and profitability, as
long as wages and salaries can be paid, not necessarily from the revenue obtained by
the company, but from the state subsidies. On the other hand, consumers are not
privileged in a command economy. They have no choice so the quality of goods and
services is often quite below standard.

3. Fill in the gaps with words from the list.

bankrupt; compete; competition; customers; inefficiency; manage; monopolies;

overstaffing; ownership; quality; share; staff; state; subsidized.

A market economy is based on private ___________(1) in contrast to planned

economy, where ___________(2) ownership prevails. In a free market economy
efficiency is the key word, while on the other hand command economy most likely
leads to ___________(3). In a free market economy inefficient businesses go
___________(4), whereas in a command economy businesses are ___________(5),
thus allowing them to survive in spite of their non-satisfactory economic performance.
8

This enables the latter type of economy to resort to ___________(6), that is

employing more personnel than actually required. Market economy leads to high
___________(7) of goods and services, while on the other hand planned economy
will not focus on offering high quality goods and services to ___________(8). This is
due to the fact that in the latter type of economy there is actually no ___________(9),
as there are state ___________(10) and therefore the options of customers are
severely restricted. On the other hand, in a market economy companies freely
___________(11) for a larger market ___________(12), and are thus forced to be
efficient and employ ___________(13) according to real necessities and
___________(14) their resources with utmost care.

SELF-ASSESSMENT TEST

1. Complete the table below with concepts that would describe characteristics of
market economy or centrally planned economy:

Market economy

Centrally planned economy

2. Write a text illustrating the positive and negative aspects of market economy
(from various perspectives: business owners, employees, consumers, etc.). The
text should not be longer than 150 words.

Submit both a copy of the table in exercise 1 and the essay on market economy to
your teacher for getting feed-back!
KEY:

Lead-In:

2.
Market economy: competition; private ownership; competitive management of
enterprises; bankruptcy of unprofitable companies; unemployment; intolerance of low
quality of goods and services; employment of staff according to real necessities;
merging of companies.
Centrally planned economy: state ownership; badly managed enterprises; subsidising
of unprofitable companies; overstaffing.

Vocabulary Development:

1.
1 p; 2 i; 3 l; 4 h; 5 d; 6 n; 7 e; 8 m; 9 a; 10 j; 11 o; 12 k; 13 f; 14 b; 15 g; 16 c.

2.
1. property; 2. owners; 3. investment; 4. entrepreneur; 5. consumers; 6. competition;
7. market share; 8. profitability; 9. bankruptcy; 10. unemployment; 11. setting;
12. supply; 13. monopoly; 14. subsidies.

3.
1. ownership; 2. state; 3. inefficiency; 4. bankrupt; 5. subsidized; 6. overstaffing;
7. quality; 8. customers; 9. competition; 10. monopolies; 11. compete; 12. share;
13. staff; 14. manage.
10

BIBLIOGRAPHY:

Hollinger, Alexander, Barghiel, Virginia, Ghiga, Georgeta. Essentials of Financial

English. Bucureti: Cavallioti, 2002.
Hollinger, Alexander. Test Your Business English Vocabulary. Bucureti: Teora,
2004.
http://www.economywatch.com.

11

UNIT TWO
FINANCIAL ACCOUNTING

OBJECTIVES:

This unit will help students to:

o become acquainted with the basic accounting terms

o understand the relevance of accounting for the effective management of a
business
o improve their comprehension of texts on accounting and financial statements

LEAD-IN

Due to the fact that bookkeeping and accounting are both concerned with financial
information and records, some people think the two terms are synonyms and they
often use the two concepts interchangeably. However, there are relevant differences
between these two concepts. Are you aware of these differences? Read the
explanations below to find out.

Accounting: the process of identifying, measuring, recording, and

communicating economic transactions. It involves analyzing transactions and
events, deciding how to report them in financial statements, and interpreting
the results. Accounting also involves designing and implementing systems to
produce useful reports and to control the operations of an organization.

Bookkeeping: the process of recording financial data by writing down the

details of transactions. Although bookkeeping is critical to developing useful
accounting information, it is only the routine, clerical part of accounting.

12

READING COMPREHENSION

Read the text below and answer the questions:

1. Why do business owners need to keep financial records?
2. What are the main financial statements used to assess company performance?
3. What do the following financial statements show about the financial situation
of a company:
a. the balance sheet
b. the statement of income?
4. What is the definition of assets? List the types of assets mentioned in the text
and give examples for each type.
5. What is the definition of liabilities? List the types of liabilities mentioned in
the text and give examples for each type.

FINANCIAL STATEMENTS AND COMPANY PERFORMANCE

Financial Statements record the performance of a business and allow the

management to diagnose its strengths and weaknesses by providing a written
summary of financial activities. There are two primary financial statements: the
Balance Sheet and the Statement of Income.
The Balance Sheet
The Balance Sheet provides a picture of the financial health of a business at a
given moment, usually at the close of an accounting period. It lists in detail those
material and intangible items the business owns (known as its assets) and what money
the business owes, either to its creditors (liabilities) or to its owners (shareholders'
equity or net worth of the business).
Assets: An asset is anything the business owns that has monetary value.

Current Assets include cash, government securities, marketable securities,

accounts receivable, notes receivable (other than from officers or employees),
inventories, prepaid expenses, and any other item that could be converted into
cash within one year in the normal course of business.
Fixed or Operational Assets are those acquired for long-term use in a business.
These are items with an expected useful business life measured in years (as
opposed to items that will wear out or be used up in less than one year and are
usually expensed when they are purchased). They are typically not for resale and
are recorded in the Balance Sheet at their net cost less accumulated depreciation.
Operational assets include Tangible Assets, such as land, plant, equipment,
machinery, leasehold improvements, furniture, fixtures, or Intangible Assets, such
13

as patents, royalty arrangements, copyrights, exclusive use contracts, and notes

receivable from officers and employees.
Liabilities: Liabilities are the claims of creditors against the assets of the business
(debts owed by the business).

Current Liabilities are accounts payable, notes payable to banks, accrued expenses
(wages, salaries), taxes payable, the current portion (due within one year) of longterm debt, and other obligations to creditors due within one year.
Long-Term Liabilities are mortgages, intermediate and long-term bank loans,
equipment loans, and any other obligation for money due to a creditor with a
maturity longer than one year.

Shareholders' equity (or net worth or capital) is money put into a business by its
owners for use by the business in acquiring assets.
At any given time, a business's assets equal the total contributions by the
creditors and owners, as illustrated by the following formula for the Balance Sheet:
Assets = Liabilities + Net worth. This formula is a basic premise of accounting. If a
business owes more money to creditors than it possesses in value of assets owned, the
net worth or owner's equity of the business will be a negative number.
The Balance Sheet is designed to show how the assets, liabilities, and net
worth of a business are distributed at any given time. It is usually prepared at regular
intervals; e.g., at each month's end, but especially at the end of each fiscal
(accounting) year.
By regularly preparing this summary of what the business owns and owes (the
Balance Sheet), the business owner/manager can identify and analyze trends in the
financial strength of the business. It permits timely modifications, such as gradually
decreasing the amount of money the business owes to creditors and increasing the
amount the business owes its owners.
The Statement of Income (the Profit-and-Loss Statement)
The second primary report included in a business's Financial Statement is the
Statement of Income. The Statement of Income is a measurement of a company's
sales and expenses over a specific period of time. It is also prepared at regular
intervals (again, each month and fiscal year end) to show the results of operating
during those accounting periods. It too follows Generally Accepted Accounting
Principles (GAAP) and contains specific revenue and expense categories regardless of
the nature of the business.
(adapted from www.bizmove.com)

14

VOCABULARY DEVELOPMENT
1. Match the terms with the definitions below:

1. accounts payable
2. accounts receivable
3. current assets
4. fixtures
5. intangible assets
6. liabilities
7. revenue
8. shareholders
9. tangible assets
10. turnover

a. a companys owners;
b. assets that do not have physical substance; their value consists in the rights
conferred by law on their owner;
c. assets that have physical substance and are used for running the operations of
the business;
d. built-in cupboards, electric-light fittings that are bought with a building;
e. cash and other assets that are expected to be converted into cash;
f. money owed by customers for goods or services purchased on credit;
g. money owed to suppliers for goods or services purchased on credit by the
company;
h. money received from sales;
i. the amount of business done by a company over a year;
j. the money the company will have to pay to someone else in the future
(including taxes or debts).

15

10

2. Make word combinations using a word from each box and then use the
combinations to complete the sentences:
distribute; grant; owe; pay; retain.

liabilities; money; profits; earnings; credit.

a. Our company has a lot of __________ that we will have to __________ by the end
of the year, otherwise our suppliers will stop doing business with us.
b. Since we dont __________ any of our __________ to the shareholders, this year
we will __________ most of our __________ .
c. Its a crisis period, so we have to __________ our customers __________ because
they dont have any cash available right now.
d. We have a lot of customers who still __________ us __________, so we have to
contact them and remind them that unless they pay by the end of the month there will
be penalties.

3. Complete the text with words from the list. You will need to use the terms
more than once: financing; investing; operations.

__________ (1) means making money by providing goods and services to the
interested customers. __________ (2) is spending cash in order to ensure the future
development of your company. __________ (3) involves raising money by issuing
and trading shares. It is of course preferable for the business if the owners are able to
pay for its future development out of money from __________ (4), without having to
use __________ (5). This means that we can speak about a good cash flow when the
amount of cash provided by means of __________ (6) has a greater value than the
cash used for __________ (7).

16

SELF-ASSESSMENT TEST

1. Match the two parts of the sentences:

1. A companys value on the stock exchange is nearly always

2. Brand names, trade marks, patents, customers and qualified staff
3. Cash, money owed by customers and inventory
4. Companies record inventory at the cost of buying or making the items
5. Land, buildings, factories and equipment

a. are current assets.

b. are intangible assets.
c. are tangible assets.
d. higher than the value of its net assets.
e. or the current market price, whichever is lower.

2. Use the terms from the list to complete the table: accounts receivable;
buildings; cash; goodwill; human capital; investments; land; reputation; stock.

Current assets

Tangible assets

Intangible assets

17

3. Sort the following items into assets and liabilities: accounts payable; accounts
receivable; accrued expenses; cash; debts; deferred taxes; dividends; inventory;
investments; land.
Assets

Liabilities

KEY:

Reading Comprehension:

Suggested answers:
1. because keeping financial records allows them to diagnose the companys strengths
and weaknesses;
2. the balance sheet and the statement of income;
3. a. the financial situation of the company at a given moment; b. the companys sales
and expenses over a specific period of time;
4. assets are items that the company owns and that have a monetary value; types of
assets: current assets (e.g. cash, government securities, marketable securities, accounts
receivable, notes receivable, inventories, prepaid expenses) and fixed/ operational
assets, which can be tangible (e.g. land, plant, equipment, machinery, leasehold
improvements, furniture, fixtures) or intangible (e.g. patents, royalty arrangements,
copyrights, exclusive use contracts, and notes receivable from officers and
employees);
5. liabilities are debts owed by the business; types of liabilities: current liabilities (e.g.
accounts payable, notes payable to banks, accrued expenses, taxes payable, the
current portion (due within one year) of long-term debt, and other obligations to
creditors due within one year) and long-term liabilities (e.g. mortgages, intermediate
and long-term bank loans, equipment loans, and any other obligation for money due
to a creditor with a maturity longer than one year).

18

Vocabulary Development:
1.
1 g; 2 f; 3 e; 4 d; 5 b; 6 j; 7 h; 8 a; 9 c; 10 i.

2.
a. Our company has a lot of liabilities that we will have to pay by the end of the year,
otherwise our suppliers will stop doing business with us.
b. Since we dont distribute any of our profits to the shareholders, this year we will
retain most of our earnings.
c. Its a crisis period, so we have to grant our customers credit because they dont
have any cash available right now.
d. We have a lot of customers who still owe us money, so we have to contact them
and remind them that unless they pay by the end of the month there will be penalties.

3.
1 operations; 2 investing; 3 financing; 4 operations; 5 financing; 6 operations;
7 investing.

Self-Assessment Test:

1.
1 d; 2 b; 3 a; 4 e; 5 c.

2.
Current assets: accounts receivable; cash; stock.
Tangible assets: buildings; investments; land.
Intangible assets: goodwill; human capital; reputation.

3.
Assets: accounts receivable; cash; inventory; investments; land.
Liabilities: accounts payable; accrued expenses; debts; deferred taxes; dividends.

19

BIBLIOGRAPHY:

Hollinger, Alexander, Barghiel, Virginia, Ghiga, Georgeta. Essentials of Financial

English. Bucureti: Cavallioti, 2002.
MacKenzie, Ian. English for Business Studies. Cambridge: Cambridge University
Press, 2002.
MacKenzie, Ian. Professional English in Use: Finance. Cambridge: Cambridge
University Press, 2006.
Prelipceanu, Cristina (coord.), David, Irina, Drbn, Maria. Excel in Business.
Bucureti: Ed. Universitar, 2006.
http://www.bizmove.com.

20

UNIT THREE
MONEY FORMS AND FUNCTIONS
OBJECTIVES:

This unit will help students to:

o get acquainted with types and functions of money

o improve their use of money-related vocabulary

LEAD-IN

Key Concepts

Money is any good that is widely used and accepted in transactions involving the
transfer of goods and services from one person to another.
Types of money:
o commodity money Commodity money is a good whose value serves as the
value of money. Gold coins are an example of commodity money. In most
countries, commodity money has been replaced with fiat money.
o fiat money Fiat money is a good, the value of which is less than the value it
represents as money. Dollar or Euro bills are an example of fiat money
because their value as slips of printed paper is less than their value as money.
o bank money Bank money consists of the book credit that banks extend to
their depositors. Transactions made using checks drawn on deposits held at
banks involve the use of bank money.
Functions of money:
Money is often defined in terms of the three functions or services that it provides.
Money serves as a medium of exchange, as a store of value, and as a unit of
account.
Medium of exchange.
Money serves as a medium of exchange because people are willing to accept it in
exchange for goods and services, which facilitates transactions and exchanges.
Without money, all transactions would have to be conducted by barter, which
involves direct exchange of one good or service for another. The difficulty with a
barter system is that in order to obtain a particular good or service from a supplier,
21

one has to possess a good or service of equal value, which the supplier also desires. In
other words, in a barter system, exchange can take place only if there is a coincidence
of wants between two transacting parties. The likelihood of a double coincidence of
wants, however, is small and makes the exchange of goods and services rather
difficult. Money effectively eliminates the double coincidence of wants problem by
serving as a medium of exchange that is accepted in all transactions, by all parties,
regardless of whether they desire each others' goods and services.
For money to be used in this way, it must possess a few crucial properties:
1. It must be divisibleeasily divided into usable quantities or fractions.
2. It must be portableeasy to carry; it cant be too heavy or bulky.
3. It must be durable strong enough to resist tearing and the print cant wash
off if it winds up in the washing machine.
4. It must be difficult to counterfeit; it wont have much value if people can make
their own.
Store of value.
In order to be a medium of exchange, money must hold its value over time; that is, it
must be a store of value. If money could not be stored for some period of time and
still remain valuable in exchange, it would not solve the double coincidence of wants
problem and therefore would not be adopted as a medium of exchange. As a store of
value, money is not unique; many other stores of value exist, such as land, works of
art, and even baseball cards and stamps. Money may not even be the best store of
value because it depreciates with inflation. However, money is more liquid than most
other stores of value because as a medium of exchange, it is readily accepted
everywhere. Furthermore, money is an easily transported store of value that is
available in a number of convenient denominations.
Unit of account.
Money also functions as a unit of account, providing a common measure of the value
of goods and services being exchanged. Knowing the value or price of a good, in
terms of money, enables both the supplier and the purchaser of the good to make
decisions about how much of the good to supply and how much of the good to
purchase.
(adapted from www.cliffsnotes.com)

22

VOCABULARY DEVELOPMENT

1. The terms below are used to describe forms and functions of money. Match
each term with its explanation. Refer back to the information in the Lead-in
section, where some of the concepts are explained:

1. Banknote
2. Coin
3. Denomination
4. Legal tender
5. Medium of exchange
6. Money
7. Representative money
8. Store of value
9. Token money
10. Unit of account

a. a function of money which allows people to calculate the value of the

transactions they make and to keep accounts;
b. a function of money which makes it generally acceptable as a means of
payment for the acquisition of goods and services;
c. a function of money which makes it possible to delay of the acquisition of
goods, because the value of the goods is stored in the money received for
them;
d. a medium of exchange that functions as a unit of account and a store of
value;
e. an item of metal currency issued by the central bank;
f. an item of paper currency issued by the central bank;
g. cash;
h. money from bank accounts;
i. money that must be accepted as a means of payment in a certain area;
j. the value printed on a monetary unit.

23

10

2. Complete the table with characteristics from the list below:

Types of

Representative money

money

Coins

Banknotes

Token money
Bank accounts

Characteristics

accepted only in the country of origin

difficult to forge

difficult to transport

durable

easy to transport

high value

liable to theft

light

low value

movable across the world at high speed

non-durable

non-physical money

physical money

portable

the owner is known

the owner is offered anonymity

3. Complete the gaps in the sentences below with verbs from the box:
borrow; earn; invest; lend; pay; save; spend; waste; win.
a. Most people work because they need to _______ money.
b. If you go shopping, you _______ money.
c. If you want to get products or services you have to be willing to _______ for
them with cash or a credit card.
d. If you dont use your money carefully, you _______ it.
24

e. When people havent got enough money available, they _______ it from
friends or from the bank.
f. If you want to _______ money, you put it in the bank, or you _______ it in a
company, and hope the company is successful.
g. Many people think of what they will do if they _______ a lot of money at the
lottery.
h. If you dont pay your debts on time, nobody will _______ you money the next
time you need it.

SELF-ASSESSMENT TEST
1. Answer the questions below:

a. What are the main functions of money?

b. What is the difference between representative money and token money?

2. Fill in the gaps with words from the box:

bank; banknotes; coins; denominations; deposits; forge; legal tender; money;

representative; token.

When people want to obtain goods or services they have to offer __________(1) in
exchange. Money is generally accepted in payments, acting as __________(2). There
are several types of money. __________(3) are metallic money and are usually made
of base metals, but they can also be made of silver or gold for higher __________(4).
__________(5) are printed on paper and are issued by central banks. They are easy
and cheap to transport and difficult to __________(6). Banknotes and coins are
__________(7) money, as contrasted to bank __________(8), which are called
__________(9) money. This type of money is instantly transferable to any part of the
world where there is a correspondent __________(10), is not usually liable to theft
and is available in any unit of value.

25

3. Choose the correct word to complete the sentences below:

1. Many member countries of the European Union have already introduced the euro.
Their national currencies are no longer ___.
a. good money

b. legal money

c. legal tender

2. In countries which are not members of the European Union the euro is ___.
a. a foreign currency

b. strange money

c. foreign money

3. He has a good salary, but he also has a lot of ___, so he cant save much.
a. paying

b. expenses

c. payout

b. capital

c. cash

4. Banknotes and coins represent ___.

a. reserves

5. Money paid by the government to unprofitable companies is called ___.

a. subsidy

b. deposit

c. aid

b. currencies

c. funds

6. The dollar and the euro are ___.

a. monies

7. When you have money in your bank account, this means that you ___ it.
a. owe

b. own

c. lend

8. If you have taken money from someone and you have to give it back, this means
you ___ money.
a. owe

b. own

c. lend

9. Offering money to people for a limited period of time, after which you expect
them to pay it back, is called ___.
a. borrowing

b. lending

c. crediting

10. Taking money from people for a limited period of time, after which you must pay
it back, is called ___.
a. borrowing

b. lending

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c. crediting

KEY:

Vocabulary Development:

1.
1 f; 2 e; 3 j; 4 I; 5 b; 6 d; 7 g; 8 c; 9 h; 10 a.

2.
Coins: accepted only in the country of origin; difficult to transport; durable; low
value; physical money; the owner is offered anonymity.
Banknotes: accepted only in the country of origin; difficult to forge; easy to transport;
high value; liable to theft; light; non-durable; portable; the owner is offered
anonymity.
Bank accounts: movable across the world at high speed; non-physical money; the
owner is known.

3.
a earn; b spend; c pay; d waste; e borrow; f save, invest; g win; h lend.

Self-Assessment Test:

1.
a. medium of exchange; store of value; unit of account.
b. representative money: physical money (cash); token money: non-physical money
(bank accounts) see exercise 2 from the Vocabulary Development section for more
details

2.
1 money; 2 legal tender; 3 coins; 4 denominations; 5 banknotes; 6 forge;
7 representative; 8 deposits; 9 token; 10 bank.

3.
1 c; 2 a; 3 b; 4 c; 5 a; 6 b; 7 b; 8 a; 9 b; 10 a.

27

BIBLIOGRAPHY:
Hollinger, Alexander, Barghiel, Virginia, Ghiga, Georgeta. Essentials of Financial
English. Bucureti: Cavallioti, 2002.
MacKenzie, Ian. Professional English in Use: Finance. Cambridge: Cambridge
University Press, 2006.
www.cliffsnotes.com

28

UNIT FOUR
BANKING SERVICES

OBJECTIVES:

This unit will help students to:

o get acquainted with the basic banking-related terms

o make comments about the main services provided by banks

VOCABULARY DEVELOPMENT

1. Match the terms below with the right explanation:

1. cash dispenser
2. current account
3. deposit account
4. instalment
5. interest
6. interest rate
7. joint account
8. loan
9. maturity
10. mortgage
11. overdraft

a) the cost of borrowing money, expressed as a percentage of the loan per period of
time;
b) something lent (usually money) that will have to be given or paid back (usually
with interest);
c) a computerised machine that allows bank customers to withdraw money;
d) a bank account held in the names of two or more people;
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e) a regular part payment of a debt;

f) a loan, usually to buy property, which serves as security for the loan;
g) a bank account which pays interest, but which cannot be used for paying cheques;
notice is often required to withdraw money;
h) the date when the principal of a redeemable security (a loan, a bond, etc.) becomes
repayable;
i) an arrangement by which a customer can withdraw more from an account than has
been deposited in it, up to an agreed limit;
j) money paid to a lender for the use of borrowed money;
k) a bank account which pays little or no interest, but allows the holder to withdraw
his/ her cash with no restrictions.

10

11

2. Fill in the gaps in the pairs of sentences below by using one of the two terms
provided for each pair:

a) owe/ own
If you possess your house, you can say that you _____ it.
When you have to reimburse a loan, this means you _____ money to someone.
b) borrow/ lend
When you take money from someone, this means you _____ something.
When you give money to someone, this means you _____ something.
c) creditor/ debtor
If you become a _____ , you have to take care not to delay with the monthly
payments.
If you are a _____ , you have to make sure you are going to receive your money back.
d) deposit/ loan
When they need money, people usually take a _____ from a bank.
Money which someone places in a bank constitutes a _____ .

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3. Choose the correct term to complete the sentences below:

1. If you open an account monthly bank statements will be sent to you by post, listing
recent ___.
a. payments

b. events

c. transactions

2. You should not reveal your PIN (Personal ___ Number) to anyone.
a. identifying

b. identifier

c. identification

3. You will need to ___ your PIN each time you use the card.
a. put in

b. type

c. enter

4. Two or more customers may apply for a ___.

a. two-person account b. joint account

c. together account

5. Current account___ may apply for a credit card issued by our bank and benefit
from special terms.
a. holders

b. owners

c. users

6. You may ___ your account only after notifying the bank in writing.
a. close

b. finish

c. end

7. Banks obtain many funds from the ___ people have to pay when they take credits.
a. dividends

b. interest

c. interests

8. People who borrow money from banks have to pay back the loan itself, also known
as the ___, as well as interest.
a. principal

b. principle

c. premium

9. A person who has borrowed money from a bank is known as a ___.

a. creditor

b. debtor

c. owner

10. Lenders are also known as ___.

a. creditors

b. debtors

c. Owners

SELF-ASSESSMENT TEST

Write a 250 words presentation of your favourite bank and the banking services
you use. Consider the following: what made you choose the respective bank;
what banking services you use; what advantages or disadvantages there are for
you as a user of the respective services; how satisfied/ dissatisfied you are with
the policy of the bank.
Submit your essay to your teacher for getting feed-back!

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KEY:

Vocabulary Development

1.
1 c; 2 k; 3 g; 4 e; 5 j; 6 a; 7 d; 8 b; 9 h; 10 f; 11 i.

2.
a. own; owe; b. borrow; lend; c. debtor; creditor; d. loan; deposit.

3.
1 c; 2 c; 3 c; 4 b; 5 a; 6 a; 7 b; 8 a; 9 b; 10 a.

BIBLIOGRAPHY:

MacKenzie, Ian. Financial English. Boston: Thomson and Heinle, 2002.

Marks, Jon. Check Your English Vocabulary for Banking and Finance. London: A&
C Black, 2007.
Prelipceanu, Cristina (coord.), David, Irina, Drbn, Maria. Excel in Business.
Bucureti: Ed. Universitar, 2006.

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UNIT FIVE
CLASSIFICATION OF BANKS

OBJECTIVES:

This unit will help students to:

o get acquainted with the vocabulary related to various types of banks

o participate in discussions on the functions various types of banks have

VOCABULARY DEVELOPMENT

A. Wholesale and Retail Banks

1. Match the terms below with their explanations:

1. Central bank
2. Commercial bank
3. Investment bank (US)
4. Merchant bank (UK)
5. Savings bank

a. a bank specialized in raising funds for the industry, issuing securities and
financing international trade through the acceptance of bills of exchange;
b. a bank responsible for carrying out the monetary policy of a country;
c. a bank specialized in financing international trade (the American
correspondent of a merchant bank);
d. a bank specialized in keeping deposits and granting loans to customers;
e. a bank specialized in accepting interest-bearing deposits for relatively small
amounts of money.

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2. Fill in the gaps in the text with suitable words from the box:

advice; charged; corporations; deposit; holders; individual; negotiate; portfolio;

profit; raising; retail; spread; underwriting; wholesale.

There are two main types of banking: __________(1) banking and wholesale banking.
Retail banking refers to banks which provide services to __________(2) customers,
while wholesale banks deal mainly with __________(3).
Commercial banks are example of retail banks. They receive money on
__________(4), pay money according to customers instructions, __________(5)
loans, buy and sell foreign currencies and offer investment __________(6).
Commercial banks make a __________(7) from the __________(8) the difference
between the interest rate paid to account __________(9) and the interest rate
__________(10) to borrowers.
Merchant banks from Britain are examples of __________ (11) banks. They offer
services to companies, such as the __________ (12) of funds on various financial
markets, the financing of international trade, the issuing and __________ (13) of
securities, __________ (14) management or investment advice.

3. Match the two parts of the sentences:

1. Banks need to keep some reserves

2. Banks lend the savers deposits
3. Before granting a loan to interested customers
4. One way in which banks create credit is by
5. The interest rate on a loan

a. bank representatives have to assess the risk level involved.

b. depends on the maturity of the loan and on the risk involved.
c. which means they cannot lend all their money to customers.

34

d. lending the same original deposit several times.

e. to customers who want to borrow money.

B. Central Banks

1. Fill in the gaps with words from the box to discover which are the main
functions of central banks:

act; control; fix; function; implement; influence; issue; maintain; provide; supervise.

Central banks:
a. __________ as banks for the government, as well as for other banks;
b. __________ the monetary policy of the country;
c. __________ the money supply;
d. __________ the minimum interest rate that the other banks are allowed to charge;
e. __________ support to the entire economic system;
f. __________ as lender of last resort for the other banks;
g. __________ currencies;
h. __________ the exchange rate;
i. __________ the integrity and value of the national currency;
j. __________ the national banking system.

2. Match the two parts of the sentences:

1. Central banks are responsible for

2. Commercial banks might start taking unnecessary risks
3. The central bank will sometimes act as a lender of last resort, lending money
4. The central bank can modify
5. There is price stability

35

a. if the monetary policy implemented by the central bank is successful.

b. if the central bank granted them loans whenever they were in a difficult
situation.
c. if a commercial bank risks going bankrupt.
d. issuing and distributing banknotes and coins.
e. the amount of money commercial banks are forced to keep as reserve.
1

SELF-ASSESSMENT TEST

1. Fill in the gaps in the text with words and expressions from the box:

assets; borrowers; deposit; depositors; grant; interest; liabilities; liquidity; maturities;

save; spend; withdraw.

When people have more money than they need to __________(1), they may choose to
__________(2) it, so they __________(3) it in bank accounts. The bank offers them
__________(4) and then uses their money to __________(5) loans to borrowers. This
allows the financial institution to make a profit by charging a higher rate of interest to
__________(6) than they pay to __________(7).
The capital a bank has and the loans it has made represent the banks __________(8).
The customers deposits represent its __________(9), because the money is actually
owed to the customers who deposited it in the first place. Banks have to keep a certain
percentage of their assets as reserves for people who want to __________(10) their
money. They also have to find the right balance between __________(11) having
cash available whenever the depositors want to withdraw it and different
__________(12) dates when loans will be repaid.

36

2. Fill in the gaps in the text with words and expressions from the box:

bail out; bank run; bankrupt; depositors; financial; lender of last resort; payments;
reserve-asset ratio; reserves; risks; unsafe; withdraw.

Commercial banks have to keep __________(1) a certain amount of their deposits

for customers who want to __________(2) their money. These are held by the central
bank, which can also modify the __________(3) the minimum percentage of its
deposits a bank has to keep in its reserves. If one bank goes __________(4), this can
have an impact on the stability of the entire __________(5) system. And if
__________(6) think a bank is __________(7), they might try to withdraw their
money, which leads to a __________(8), or a run on the bank, resulting in the bank
using up its reserves. In such situations central banks can act as a __________(9).
Lending money to the financial institutions in difficulty , thus allowing them to make
__________(10). But central banks do not always decide to __________(11) bail out
these institutions, because this might encourage banks to take __________(12) they
would otherwise avoid.

KEY:

Vocabulary Development:

A. Wholesale and Retail Banks

1.
1 b; 2 d; 3 c; 4 a; 5e.

2.
1 retail; 2 individual; 3 corporations; 4 deposit; 5 negotiate; 6 advice; 7 profit;
8 spread; 9 holders; 10 charged; 11 wholesale; 12 raising; 13 underwriting;
14 portfolio.

3.
1 c; 2 e; 3 a; 4 d; 5 b.
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B. Central Banks

1.
a function; b implement; c control; d fix; e provide; f act; g issue; h influence;
i maintain; j supervise.

2.
1 d; 2 b; 3 c; 4 e; 5 a.

Self-Assessment Test:

1.
1 spend; 2 save; 3 deposit; 4 interest; 5 grant; 6 borrowers; 7 depositors; 8 assets;
9 liabilities; 10 withdraw; 11 liquidity; 12 maturities.

2.
1 reserves; 2 withdraw; 3 reserve-asset ratio; 4 bankrupt; 5 financial; 6 depositors;
7 unsafe; 8 bank run; 9 lender of last resort; 10 payments; 11 bail out; 12 risks.

BIBLIOGRAPHY:
Hollinger, Alexander, Barghiel, Virginia, Ghiga, Georgeta. Essentials of Financial
English. Bucureti: Cavallioti, 2002.
Hollinger, Alexander. Test Your Business English Vocabulary. Bucureti: Teora,
2004.
MacKenzie, Ian. Financial English. Boston: Thomson and Heinle, 2002.
MacKenzie, Ian. Professional English in Use: Finance. Cambridge: Cambridge
University Press, 2006.

38