金融英語人民銀行認證

1、Introduction to FinanceContentsPart 1Money and Credit6Section 1 Money and Money Supply6I. The Functions of Money6II. The Meaning and Types of Money7Section 2Credit and Money Creation14I. Credit14II. The Forms of Credit16III. Money Creation21Part 2 Money Demand and Money Supply26Section 1 Money Deman

2、d26I. The Implication of Money Demand26II. The Factors That Determine Demand for Money27III. The Quantity of Money Needed and Its Measurement29IV. Theories of Money Demand31Section 2 Money Supply42I. The Quantity of Money Supply and Some Concepts Relating to It42II. The Mechanism of Money Supply44II

3、I. The Theories of Money Supply49Part 3 Inflation and Deflation52Section 1 Inflation52I. The Overview of Inflation52II. Inflation Effects58III. The Counter-measures of Inflation64IV. Deflation67Part4 Balance-of-Payments74Section 1 Balance-of-Payments Structure74I. Current Account74II. Capital Accoun

4、t75III. Statistical Discrepancy: Errors and Omissions76Section 2 Balance-of-Payments Adjustments77I. Price Adjustments77II. Interest Adjustment79III. Income Adjustment80IV. Monetary Adjustment80Section 3 Theories of Balance-of-Payments82I. The Elasticity Approach to Exchange-Rate Adjustment82II. The

5、 Absorption Approach to Exchange-Rate Adjustment84III. The Monetary Approach to Exchange-Rate Adjustment85Part 5 Foreign Exchange87Section 1 Exchange-Rate Determination87Section 2 Types of Foreign-Exchange Transactions89Part 6 Macroeconomic Policy in an Open Economy91Section 1 Economic Policy in an

6、Open Economy91I. Economic Objectives of Nations91II. Policy Instruments91III. Exchange-Rate Policies and Overall Balance93IV. Monetary Policy and Fiscal Policy: Effects on Internal Balance94V. Monetary and Fiscal Policies : Effects on External Balance97VI . Monetary Policy and Fiscal Policy: Policy

7、Agreement and PolicyConflict98Section 2 External Debt100I. Definition and Classification100II. External Debt Sustainability100III. Indicators of External Debt Sustainability101Section 3 ForeignReserve Management106I. Foreign Reserve106II. Foreign Exchange Reserve Management110Part 7 Financial Regula

8、tion119Section 1Theory of Financial Regulation119I . Objectives of Financial Regulation119I. The Economic Rationale for Financial Regulation120Section 2Models and Contents of Financial Supervision128I. The Institutional Approach to Supervision129II. The Functional Approach to Supervision131III. The

9、Integrated Approach to Supervision132Section 3 Harmonization ofInternational Financial Regulation135I. International Harmonization of Financial Regulations135Part 8 Commercial Bank Businesses142Section 1 Bank Liabilities142I. Structure of Bank Liabilities142II. Bank Deposits143III. Core Deposits and

10、 Volatile Borrowings144IV. Deposits Pricing145Section 2 Bank Borrowings148I. Liability Management148II. Nondeposit Sources of Funds149III. Choosing among Alternative Nondeposit Sources151Section 3 Loan Types and Policies154I. Major Types of Loans154II. Loan Policy157Section 4 Loan Procedures162I. Bu

11、siness Development and Credit Analysis162II. Loan Execution and Administration165III. Credit Review166Section 5 Lending to Businesses169I. Types of Business Loans169II. Evaluating Business Loans174III. Pricing Business Loans184Section 6 Lending to Individuals186I. Types of Loans Granted to Individua

12、ls and Families186II. Characteristics of Consumer Loans188III. Credit Analysis of Consumer Loans189Section 7 Lending to Small Businesses192I. Definition of Small Business192II. Financing Difficulties for Small Business Lending193III. Evaluating Small Business Lending194Section 8 Trade Finance196I. P

13、acking Loans196II. Bill Purchase197III. Export Credit199IV. Factoring200V. Forfeiting203Section 9 International Settlement205I. Outward Remittance205II. Inward Remittance207III. Clean Collection208IV. Documentary Collection209V. Letters of Credit212VI. Letters of Guarantee215Section 10 Securitizatio

14、n217I. Pooling and Transfer218II. Issuance218III. Credit Enhancement and Tranching219IV. Servicing220V. Repayment Structure221VI. Motives for Securitization221Section 11 Bank Letters and Telecommunications225I. Bank Letters225II. Telex237III. SWIFT241IV. Memos253V. E-mail255Part 9 Basic Theory of As

15、set Pricing257Section 1The Portfolio Theory of Harry Markowitz257I. Background257II. Measures of Risk257III. Expected Rates of Return258IV. Variance and Standard Deviation of Returns for an IndividualInvestment258V. Covariance and Correlation of Returns for a Portfolio259VI. Standard Deviation of a

16、Portfolio260VII. Demonstration of the Portfolio Standard Deviation Calculation260VIII. The Efficient Frontier264Section 2The Capital Asset Pricing Model266I. The APT Model270II. The Comparison between APT and CAPM271III. An Example272IV. The Multifactor Models272Part 10 Financial Market275Section 1

17、Introduction to Money Markets275I. Definition of Money Markets275II The Instruments of Money Markets276Section 2 Introduction to Capital Market288I. Definition of Capital Markets288II. The Structure of Capital Markets288III. Bond Market290IV. Stock Markets Securities292V. Characteristics of the Stoc

18、k Market293Section 3 Mutual Funds and Other Investment Companies297I. The Function of Mutual Funds297II. Different Types of Funds298Section 4 Derivatives Markets301I. Forward Contracts301II. Futures Contracts304III. The Option Contract310IV. Swap318Part 1Money and CreditSection 1 Money and Money Sup

19、plyI. The Functions of Money1. Medium of Exchange or Means of ExchangeMoney as a medium of exchange effectively eliminates the requirement ofdouble coincidence of wants and overcomes the difficulty of barter. Money alsopromotes production efficiency by allowing people to specialize in what they do b

20、est.Money is therefore essential in an economy: It is a lubricant that allows the economyto run more smoothly by lowering transactions costs, thereby encouragingspecialization and division of labor. In history, money first facilitated exchange,which made it possible for people to engage in what fit

21、them most and then appeareddivision of labor in each trade, which brought about a great growth of production. In19th century,western countries adopted the method of specialization and division oflabor in their production on a large scale. As a result, there were increasingly amplegoods people could

22、choose and price dropped greatly. The impact of money oneconomy was enormous.2. Unit of Account or Standard of ValueIn a barter economy, money does not perform this function as unit of account.In a barter economy, double coincidence of wants is not only hard to find, but alsodifficult for two trader

23、s to agree upon an exchange ratio. For example, how manypounds of apples should be exchanged for a bag of wheat? When only two goods aretraded, only one exchange ratio must be determined, but as the number of goodsproduced in the economy increases, the number of exchange ratios grows greatly.Negotia

24、ting the exchange ratios for goods exchanges is complicated in a bartereconomy because there is no common measure of value. People have to determineand keep in mind numerous exchange ratios of goods. Using money as a unit of account reduces transaction costs inan economy by reducing the number of pr

25、ices that need to be considered. Thebenefits of this function of money grow as the economybecomes more complex.3. Store of ValueA store of value is used to save purchasing power from the time when income isreceived until the time when it is spent. That means money is used to defer the timeof exchang

26、e of goods and services. This function of money is useful because most ofus do not want to spend our income immediately upon receiving it but to wait untilwe have the time or the desire to shop.The effectiveness of money as a store of value depends on two factors: one isthe easiness that people can

27、get goods with money when in need of them; the otheris the price level because the value of money is fixed in terms of the price level. Adoubling of all prices implies that the value of money has dropped by half;conversely, a halving of all prices implies that the value of money has doubled. Ininfla

28、tion, when the price level is increasing rapidly, money does not serve the store-of-value function well because money loses value rapidly, the purchasing power ofmoney declines and people will not be willing to hold their wealth in this form. Somoney can function as store of value only when its valu

29、e is stable as an asset.II. The Meaning and Types of Money1. The Meaning of MoneyMarx defines money as a special commodity that permanently serves as ageneral equivalent. There are prerequisites for Marx s definition of money in threeaspects: first, money is a commodity with value and value in use.

30、Only in this casecan money play various functions; second, money has the ability to display value ofgoods with its own value in use, i. e. money can serve as a general equivalent;third, money itself is a commodity with value and value in use representing generalpurchasing power, so money becomes gen

31、erally accepted. Obviously, Marxs theory isbased on the system of metallic money. When discussing paper money circulation,Marx explains that paper money is the representative of metallic money and is asymbol of value and functions as money indirectly. But in modern society, money incirculation in mo

32、st countries has no relation with precious metal, such as gold andsilver, so Marxs theory cannot explain this phenomenon wholly.Western economists define money (or, equivalently, the money supply) asanything that is generally accepted in payment for goods or services or in therepayment of debts. Cur

33、rency, which is bank notes and coins, clearly fits thisdefinition and is one type of money. When most people talk about“money”today,they are talking about currency.Therefore, to define money merely as currency is much too narrow todaybecause besides currency, payments can also be made by the transfe

34、r of depositbalance via checks or electronic transfer system. So accepted generally in paymentfor purchases of goods and services or in the repayment of debts, checking accountdeposits are important parts of money as well. Therefore an even broader definitionof money is often needed because other it

35、ems such as savings deposits can in effectfunction as money if they can be quickly and easily converted into currency. This isalso true with time deposits. They are all items that are“generally acceptable”inmaking payment.2. Types of MoneySince the primitive economy, money changed from commodity mon

36、ey tometallic money, from metallic money to representative money, from representativemoney to credit money and finally electronic money. In economic life, the need formoney is so strong that almost every society, except the most primitive one, inventsit.(1) Commodity money or money in kindA commodit

37、y that becomes a medium of exchange is called a commodity moneyor money in kind, when its value in the non-money use is equal to its value asmoney. The commodity money is the oldest form of money, mainly used in a bartereconomy. Take diamond for example, it can be used both as money in exchange forg

38、oods and services or discharge of debts and as a general commodity inconsumption, and the value of diamond as money is equal to the value of it asgeneral commodity. Consequently diamond becomes commodity money. In history alot of commodities were used as medium of exchange, such as stones, whale tee

39、th,sandal wood, tortoise shells, rice, salt, copper, silk, leather, diamonds, etc.With development of exchange of goods, such kinds of commodity money showedtheir shortcomings, say, some of them were very large in size and indivisible so thatthey could not be carried around which impeded their servi

40、ng as ideal medium ofexchange; others were not stable in value which hindered them from functioning asstandard of value and store of value. In practice, over the past 4,000 years, thepredominant commodity moneys have been precious metals: mostly silver and gold,also called full-bodied money. Full-bo

41、died money was one of stages of commoditymoney. At the stage of commodity money or money in kind there were a lot ofcommodities functioning as money which were often changing and not fixed; at thestage of full-bodied money the special commodity as money centered on only onekind of commodity, which w

42、as precious metals like gold or silver. Gold and silverare in great demand for ornamentation because they are durable, beautiful, and canbe shaped. The supply of these metals is so limited so that very small amounts havegreat value. This makes them easy to carry around as money. Furthermore, they ca

43、nbe refined into the pure metal rather easily, making their quality uniform. Variousquantities can also be weighed out so that exchanges of varying values can be made.Almost all countries have passed the stage of precious metallic money which used tobe a perfect form of money.(2)Representative money

44、Representative money or representative full-bodied money refers to paper moneyfully backed by a precious metal.Representative money first emerged in Britain. During the latter part of MiddleAges the earliest forerunners of private banksGoldsmiths themselves had massivevaults and secure facilities fo

45、r the safeguard of their precious metals. Thusindividuals owning gold or other precious metals without secure facilities for theirsafeguard, brought them to the Goldsmiths in exchange for the Goldsmithsreceiptsor IOUs. It was often more convenient to conduct a transaction by signing over thereceipts

46、 rather than handing over the gold itself. As the receipts or IOUs thencirculated freely they became the first representative full-bodied money.Later bankers went into the loan business, lending either gold itself or issuingadditional receipts or notes. In so doing the bankers issued notes for more

47、gold thanthey actually had in their vaults. This practice not only represents one of the earliestexamples of credit money but also describes the origins of modern fractional reservesystem of commercial banking and money creation. Later, governments also issuedmoney in the form of paper to represent

48、certain quantities of gold or silver kept ondeposit by the government to back such paper and also regulated the issuance ofpaper money by banks.The general acceptance of paper money as a means of exchange, with nointention of redeeming it for the precious metals behind it, made it possible for theis

49、suance of paper money with no such backing. Whats more, the downfall of thegold standard or the silver standard in western countries in 1930s because ofeconomic and financial crisis stopped the exchange of paper money for metals. Thenthe major western countries had to break away from the metal stand

50、ard, thus papermoney could be converted into gold no more. Hence representative money exitedcirculation and credit money emerged.(3) Credit moneyCredit money is a kind of credit certificate that serves as means of exchange andmeans of payment in circulation and does not consist of or represent a spe

51、cificvaluable commodity. The value of credit money depends on its general acceptancebased on the credit of its issuer and that it is created through credit process. Creditmoney has two features: 1) It has no relation with precious metals; 2) It is basedon the credit of national governments and banks

52、. Its known to all that the publicstill has confidence in credit money if the quantity of the money issued isreasonable. So there neednt be precious metals to back the issuance of creditmoney. But it does not mean that modern credit money has not any reserves to backits issuance. In fact, most count

53、ries in the world that adopts the system of creditmoney have a fairly big amount of reserves, such as gold, foreign exchange, etc. ,for issuance of credit money. Obviously governments and monetary authorities are nolonger constrained by the full reserves of precious metal or other assets. As long as

54、the public has confidence in the credit of governments and banks and wont cash allthe deposits, banks only need to keep a small sum of cash in vaults as reserves andlend out the rest of funds deposited to earn interest.From time to time, money issued was based only on the general credit of agovernme

55、nt and on the provision that such money was legal tender, acceptable topay taxes and to fulfill contracts calling for payment in lawful money. This is thecase today in the most countries in the world. Since this money is proclaimed to bemoney by law or a decree known as a fiat, it is sometimes calle

56、d fiat money.Later, the privilege of private banks to issue paper money of any type becamemore and more restricted and has been abolished in all countries in recent years.The only banks that issue any significant amounts of paper money today are centralbanks, most of which are owned or controlled by

57、 national governments of countries.Almost all money circulating in the world today is some form of credit money.Credit money includes not only currency (bank notes and coins) but also bankdeposits which are also created by banks.(4) Electronic MoneyElectronic money refers to depository money that is stored and processedthrough computer system or electronic payment system. Electronic money takesmany differ