VI. Meanings

V. Join the halves.

On the left there are six halves of the sentences. On the right there are the other halves of the sentences, though not in the same order. You are required to make complete sentences.

1. The principal role of the Market Services Division is	a) market participants can settle deals in gilt-edged securities and money market instruments, and ECU securities.
2. For the financial markets it operates book entry systems through which	b) debt management and reserves management objectives.
3. During 1996/97, the Division has been greatly involved	c) for gold bullion for members of the London Bullion Market and the Bank's central bank customers.
4. It has also been affected by the reforms in the Bank's sterling money market operations,	d) in progressing a number of financial infrastructure projects and in preparations for EMU.
5. It also provides a book entry transfer system	e) implemented on 3 March 1997, which have widened the range of the instruments in which the Bank is prepared to deal to include gilt repo, and widened the range of counterparties to include key players in the repo market, including major banks and securities firms.
6. The Division provides "back office" facilities for the Bank's operations in support of monetary policy,	f) to provide settlement and custody services to the Bank's internal and external customers, and to the markets in general.

Read the passage below and explain the meanings of the words and phrases, which have been underlined.

The collaborative development with the Association for Payment Clearing Services (APACS) of a Real-Time Gross Settlement system (RTGS) for sterling payments, an evolution from the previous CHAPS system, was referred to in last year's report. This work came to fruition in April 1996 when the new arrangements were inaugurated. RTGS involves the final settlement in central bank funds of each payment passing through CHAPS at the time it is made, rather than on a net basis at the end of each day. At the end of November 1996, a record 127,000 payments passed through CHAPS on a single day.

The project to develop RTGS was one of a series of initiatives to reduce systemic risks in the operation of the payment and settlement systems in the United Kingdom. In the first half of 1996, the Division took part in a strategic-review, carried out by the Bank, to identify how best to progress these initiatives.Some key elements of strategy to emerge from this review, upon which work has continued, were as follows:-

First, to complete the work on upgrading the Central Gilts Office (CGO) gilt settlement system. This system was originally implemented in 1986, at the time of Big Bang, and although it has worked satisfactorily for ten years it is in need of enhancement. Following a period of consultation with the market, it was announced, in 1995, that the system would be upgraded using the software designed for CREST, the equity settlement system.

VII. Complete the sentences using your own words:

1. The first objective of any central bank is ……

2. Monetary policy operates in the UK mainly through …..

3. Setting monetary policy - deciding on the level of interest rates necessary to meet the inflation target - ……

4. As part of the Government's move to increase public scrutiny of policy making, ………

5. The minutes, which include the Governor's advice, are now …….

6. Although the decision on whether, and by how much, to change interest rates is the Chancellor's, ……..

7. When more money flows from the banks to the government than vice versa, the banks' holdings of liquid assets are run down and ……….

8. Interest rates affect ………….

9. The reserves are held in a government account called the Exchange Equalization Account, which was set up in ………….

10. Short-term interest rates and foreign exchange market intervention are ……

UNIT II

THE UK MONEY AND BANKING MARKETS

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