The growing internationalization of financial markets has become an important trend. Before the 1980s, US ____1____ were much larger than financial markets outside the United States, but in recent years the dominance of US markets has been disappearing. The growth of foreign financial markets has been the result of both large increases in the ____2____ in foreign countries such as Japan and the ____3____ of foreign financial markets, which has enabled them ____4____ their activities. American investors often seek ____5____ abroad. Similarly, ____6____ and banks raise ____7____ from Americans, and foreigners have become ____8____ in the United States.
5.5.3 Complete the text. Replace the Russian words and phrases by English equivalents.
International Bond Market, Eurobonds, and Eurocurrencies
The traditional instruments in the international bond market are known as foreign bonds. are sold in a foreign country and are denominated in that countrys . For example, if the German automaker Porsche in the United States in US dollars, it is classified as . Foreign bonds have been an in the international for centuries. In fact, a large percentage of US railroads built in the nineteenth century by sales of foreign bonds in Britain.
A more recent in the international bond market is the Eurobond, a bond denominated other than that of the country in which it is sold , a bond denominated in US dollars sold London. Currently, over 80% of the in the are Eurobonds, and the market for these has grown very rapidly. As a result, the Eurobond market is now larger than the US .
A variant of the Eurobond is Eurocurrencies, which are deposited in banks outside the home country. The most important of the Eurocurrencies are , which are US dollars in foreign banks outside the United States or in of US banks. Because these short-term deposits earn , they are similar to Eurobonds.
5.5.4 Text for discussion.
a. Look up the dictionary for the meaning and pronunciation of the following words and word-combinations and use them to discuss the problems outlined in the text.
Regulation, to issue securities, assets and liabilities, earnings, sales of stock, insider trading, to prohibit, soundness, licensing, financial books, deposit insurance, to subject to restrictions, branching, to abolish, legislation, a stake.
b. Briefly scan the text and outline the list of major points.
c. Read the text more carefully and comment on the following items:
- reporting requirements for financial intermediaries;
- restrictions on assets and activities of financial intermediaries;
- the necessity of deposit insurance.
Financial Regulation
|
|
|
Not surprisingly, given the similarity of the economic system in the USA and in Japan, Canada, and the nations of Western Europe, financial regulation in these countries is similar to financial regulation in the United States. The provision of information is improved by requiring corporations issuing securities to report details about assets and liabilities, earnings, and sales of stock, and by prohibiting insider trading. The soundness of intermediaries is ensured by licensing, periodic inspection of financial intermediaries books, and the provision of deposit insurance.
The major differences between financial regulation in the United States and abroad relate to bank regulation. In the past, the United States was the only industrialized country to subject banks to restrictions on branching, which limited banks size and restricted them to certain geographic regions. (These restrictions were abolished by legislation in 1994.) US banks are also the most restricted in the range of assets they may hold. Banks abroad frequently hold shares in commercial firms; in Japan and Germany, those stakes can be sizable.
