Hagar Osman Osman ID:21525 G6

English Assignment 1
Exercise 1:
1. What are the other names of the Central bank?
Reserve bank or Monetary authority.
2. What are the main functions implemented by the
central bank?
The central bank provides guidance to other banks
whenever they face any problem. It also maintains
record of Government revenue and expenditure under
various heads.
3. How is the Government’s monetary policy
implemented through the Central bank?
By deciding on the interest rates for bank deposits and
bank loans.
4. Which banks are called retails?
Retail banks are businesses that trade in money.
5. What services are offered by commercial banks ?
What is their primary business?
They receive and hold deposits , pay money according to
customer’s instructions , lend money, offer investment
advice, exchange foreign currencies. Their primary
business is creating credit because the money they lend,
from their deposits, is generally spent. And in this way
transferred to another bank account .
6. In what way do commercial banks make profit?
They make profit from the difference between the
interest rates they pay to lenders or depositors and those
they charge to borrowers.
7. Why may the bank become insolvent?
Because the value of the bank’s assets falls to below the
market value of the bank’s liabilities.
8. What are the main activities of merchant banks in
Great Britain?
Merchant banks in Britain raise funds for industry on the
various financial markets, finance international trade
,issue and underwrite securities deal with takeovers and
mergers ,and issue government bonds.
9. What are the differences between investment banks
and commercial banks?
Commercial banks make profit from the difference
between the interest rates they pay to lenders or
depositors and those they charge to borrowers.
Investment banks make their profits from the fees and
commissions they charge for their services.
10. How is the bank rate regulated?
A country’s minimum interest rate is usually fixed by the
central bank. This is the discount rate , at which the
central bank makes secured loans to commercial banks.