■ deposit B make a living B reliable B security ■ sensible ■ transfer
1 ................... against possible burglaries, they installed alarms.
2 Some people aren't very... with their money and they waste it on useless things.
3 If you are injured at work, you may get money to—-for losing your salary.
4 If something is....... t you can trust it to work properly.
5 things are easy to roach or to get.
6 When you......... things you move them from one place to another.
7 A"............. is a machine that gives customers money when the bank is closed.
3 Most people have to work in order to
9 When you make a....... you put money into your account.
10 When you make a...... you take money out of your account.
If you work, you've probably got a hank account. You could keep the money you earn each month in a box under your bed, but it wouldn't be very sensible. One reason is that it's not very safe. If your house gets burgled, you’ll lose everything you've saved. Another reason is that your money will lose value. As prices rise, the money in a box under your bed will be able to buy fewer and fewer things. Money in a bank savings account, however, will earn interest. The interest will help compensate for die effect of inflation. But banks are more than just safe places for your money. What other services do they offer? The other main service is lending money. Individuals and businesses often need to borrow money, and they need a lender that they can trust. This is exactly what banks are – reliable lenders. In fact, most of the money that people deposit in their bank accounts is immediately lent out to someone else.
Apart from storing and lending money, banks offer other financial services. Most of these arc ways of making money more accessible to customers. For example, banks help people transfer money securely. They give customers cheque books and credit cards to use instead of cash. They provide ATM machines so that people can get cash any time of the day or night.
But how do banks make a living? Basically, they make a living by charging interest on loans. Of course, when you make a deposit into a bank savings account, the bank pays you interest on that money. However, the rate they pay savers is less than the rate they charge borrowers. The extra money they make by charging interest on loans is where banks earn most of their money.
For banks, interest is also a kind of security. Sometimes people do not pay back money they borrow. This is called defaulting on a loan. When someone defaults on a loan, die bank uses money earned from interest to cover the loss. All of this means that most of the money people have saved in die bank is not there at all! A small amount of the total savings is kept by die bank so that customers can make withdrawals. The rest, however, is made available for loans. The amount that is kept is called the reserve. The reserve must be a certain percentage of all the savings received from customers - for example 20 per cent. This figure is set by the central bank, and this is one of the ways that governments can control die amount of money circulating in the economy.
Now read the text again and answer these questions in your own words in the space provided below.
1 What two reasons are given for saving your money in a bank account?
2 Why do people prefer to borrow money from banks?
3 Do banks do anything else for their customers other than store and lend money?
4 How do banks earn money?
5 Who decides how much money the bank keeps in reserve?
Before you listen
Discuss these questions with your partner. If a bank note is not real, we call it a fake or counterfeit note. How do you know if a banknote is real or not? What can banks do to make people trust their notes and coins?
I F Listening *])) Look at these notes about whether a ten-pound note is genuine or not and see if you can guess what goes in the gaps.
Paper is very (1)..........
The words (2).......... are raised from the paper.
There should be a strip of (3)... in the middle of the note.
There is a watermark of the (4)...
There is a hologram which shows a picture of
Britannia, who was a (5)..... and the
With a magnifying glass you can see the word
(7)................ written in tiny microlettering.
If you put the note under fluorescent light, a bright