UNIT IV

INTERNATIONAL FINANCIAL BODIES

Objectives:

-students get familiar with specific terminology

-practice the new vocabulary
-reading and writing skills development

Reading comprehension

At the end of the Second World War, representatives of the United States, Great Britain, France,
Russia, and 40 other countries met at Bretton Woods, a resort in New Hampshire, to lay the
foundation for the post-war international financial order. They hoped that the new system would
prevent another worldwide economic cataclysm like the Great Depression that had destabilized
Europe and the United States in the 1930s and had contributed to the rise of Fascism and the war.
Therefore, the United Nations Monetary and Financial Conference, as the Bretton Woods
conference was officially called, created the International Monetary Fund (the IMF) and the
World Bank to prevent economic crises and to rebuild economies shattered by the war. The
Bretton Woods strategy addressed what were considered to be the two main causes of the pre-
war economic downturn and obstacles to future global prosperity - the lack of stable financial
markets around the world that had led to the war and the destruction caused by the war itself.
The IMF would be aimed at stabilizing global financial markets and national currencies by
providing the resources to establish secure monetary policy and exchange rate regimes, while the
World Bank would rebuild Europe by facilitating investment in reconstruction and development.
Although intended to benefit the global economy and contribute to world peace, the World Bank
and the IMF, collectively referred to as international financial institutions (IFIs), have been
resented and viewed as imposing Western-style capitalism on developing countries without
regard to the social effects.
http://www.globalization101.org/uploads/File/IMF/imfall.pdf
 I. Comment in groups the following questions:
1. What are the two main international financial institutions?
2. Make reference to their role in regulating the international financial markets.

II. Read the following article then answer the questions.

As far back as 320 BC, the Ancient Greeks made laws forbidding people to throw away their
waste or leave it to accumulate in unpaved streets and roadways. They realized that dumping
household garbage and the improper incineration of solid waste were making pollution worse
and jeopardizing public health—just as, today in Palestine, the burning and illegal dumping
of household waste are of concern to the World Bank Group. In the year 2000, the World
Bank began a program designed to protect public health and Palestine’s scarce natural
resources by closing random dumpsites in a sanitary manner and developing controlled
regional landfills instead, building up Palestine’s institutional capacity to manage sustainable
waste programs. Zahrat Al-Finjan is a flower commonly found around the sanitary landfill
area in Jenin in the northern part of the West Bank. It is also the name of the Facebook page
created by the Jenin Joint Services Council to raise awareness of its new solid waste
management system—including the landfill, which has been operational since July 2007. The
page became a venue for citizens’ engagement, and a tool for them to use to post their
concerns, suggestions and compliments.
http://www.worldbank.org/en/news/feature/2016/02/17/working-amid-fragility-delivering-
results-in-essential-services-in-palestine

1. Make clear the relationship that the author makes between public health protection
concept in ancient times and modern time institutional capacity to manage waste
programs.
2. Mark the ideas in the text and draw out a flowchart showing their cause-effect
relationship.

VOCABULARY
III. Find the missing words in the blanks : labor market; subsidize; investment; emergency
funds; economic policies; currencies, balance of payment; central bank;
macroeconomic policies; monetary system

Despite its increased visibility, the International Monetary Fund remains a mysterious presence
on the international scene. Some observers, confusing it with the World Bank, are under the
impression that IMF exists to a) ……….. economic development in the poor nations. Others
imagine it as an international b) ……….. …….. controlling the creation of money on a world
scale.
The IMF is rather a cooperative institution that 186 countries have voluntarily joined because
they see the advantage of consulting with one another to maintain a stable system of buying and
selling their c) ……….. so that payments can take place between countries smoothly and without
delay. The IMF is responsible for the creation and maintenance of the international d) ……..
…….. by which international payments among countries take place. It thus strives to provide a
systematic mechanism in order to foster e) …………. and promote balanced global economic
trade. To achieve these goals, the IMF advises on the f) ………. …….. of a country, which affect
its exchange rate and its government's budget, money and credit management. The IMF will
appraise a country's financial sector and its regulatory policies, as well as structural policies that
relate to the g) ……… ……. and employment. It may offer financial assistance to nations in
need of correcting h) ………… .. ………… discrepancies. Contrary to the widespread
perception, the IMF has no effective authority over domestic i) ……… ……… of its members. It
often urges members to make the best use of scarce resources by refraining from unproductive
military expenditures or by spending more money on health and education. The IMF also offers
technical assistance to transitional economies in the changeover from centrally planned to market
run economies and provides j) ……….. ……….. to collapsed economies.

(External Relations Department, Publications Services International Monetary Fund, Washington

DC, USA).
1. What is the role of IMF in the former communist countries?

IV. Mind the meaning of: medium-term arrangement, stand-by agreement, poverty
reduction and growth facility. Find their appropriate place in the text.
There are three widely implemented facilities by which the IMF can lend its money. A ……….
… …………offers financing of a short-term balance of payments, usually between 12 to 18
months. The extended fund facility is a …………-……….. ……….. by which countries can
borrow a certain amount of money, typically over a three- to four-year period. It aims to address
structural problems within the macroeconomy that are causing chronic balance of payment
inequities. The structural problems are addressed through financial and tax sector reform and the
privatization of public enterprises. The third main facility offered by the IMF is known as the
……….. …….. … ………. ……….. As the name implies, it aims to reduce poverty in the
poorest of member countries while laying the foundations for economic development. Loans are
administered with especially low interest rates.

1. economic program involving financial aid to a member state in need of financial

assistance, normally arising from a financial crisis. In return for aid, the economic
program stipulates needed reforms in the recipient country aimed at bringing it back on a
path of financial stability and economic sustainability.
2. Strategic IMF arrangements aiming the emerging-market economies growth, efficiency
gains and crisis prevention. It focuses on fiscal policy and debt management and on the
analysis of macroeconomic policies, debt dynamics, and exchange rate regimes.
3. A new approach to supporting reform and adjustment programs in low-income countries.
Its key elements are the development of the countries by themselves through poverty
reduction strategies, and the achievement of related international development goals.
 WRITING
V. Read the introduction of the following article and complete it in writing using the
following ideas:
1. The study of the economic impact assumes that the biggest risk from the disease is for
women of child-bearing age, due to the association of Zika with a rise in the rate of
children born with microcephaly, or abnormally small heads.
2. However, it said that if Zika is also tied to the paralysis-causing Guillain-Barre
syndrome, if transmission by sexual contact is confirmed or if the public becomes
even more worried about the disease, the economic impact could be "significantly
larger."
3. "Our analysis underscores the importance of urgent action to halt the spread of the
Zika virus and to protect the health and well-being of people in the affected
countries," said World Bank President Jim Yong Kim.

World Bank: fast action needed to lower economic impact of Zika

The World Bank said today that a rapid response is necessary to minimize the impact of the Zika
virus outbreak on the economies of Latin America and the Caribbean. With "a swift, well-
coordinated international response," the impact of the mosquito-borne disease will be modest,
perhaps taking USD 3.5 billion, or 0.06 percentage points, off of gross domestic output (GDP)
for the region this year. But the island countries of the tourism-dependent Caribbean, where the
disease has spread rapidly, could be hit by losses of more than one percent of GDP, the Bank
said.

GRAMMAR

Order of Adjectives
When we have more than one adjective we use them in the following order:
Opinion: wonderful, lovely, nice, difficult, important
Size: large, small, long, short
Other features: cheap, clean, quiet, fast
Age: new, old, second-hand
Shape, pattern, color: circular, rectangular, flat, stripped, red, green
Origin, nationality: French, American, Romanian
Material: wooden, plastic, steel
Type (What kind): third generation (phone), economic policy; safety device; investment bank
Words in the final two categories can be nouns used as adjectives:
10-page American legal contract (size, nationality, type)
 Francis, who is on a five-day trip to Mexico, was greeting fans at a stadium of Morella
city. (size, type)
Proposals to eliminate high-value US and European banknotes gain traction. (size,
quality, type)
A fast new sports car (quality, age, type)
An efficient world-wide distribution network (opinion, size, type)
Cheap clean energy source (quality, quantity, type)

Adjectives ending in –ing and –ed

The –ed and-ing endings are not specific only for verbs, but also for adjectives.
Adjectives ending in –ing describe something we are reacting to (outside us; it causes a feeling)
Adjectives ending in –ed describe our feelings and reactions (inside us)
The report was very interesting.
The bank management was very interested in outsourcing the accounting service.
Dar also exchanged views with Illongovan regarding several ongoing Projects
being financed by the World Bank.

VII. Arrange the adjectives appropriately in the brackets in the following text:
The world’s bad guys, from South America’s cocaine cowboys to the (State; extremist; Islamic);
group to tax evaders smuggling riches into Switzerland, are often depicted shouldering sacks or
toting briefcases jammed with bundles of $100 or 500 euro banknotes. If (large; denomination;
those) bills were eliminated, argues a new Harvard University study, the drug dealers, arms
traders, terrorists and tax cheats would find it a whole lot more onerous and risky to move their
cash around undetected.
The idea is gaining support. The former US Treasury Secretary Larry Summers called on for a
moratorium on printing (high-value; new) notes, to begin cutting the supply.
The (euro; 500; euro; denomination), for its size and portability, has become so prized in
underground finance that it can trade at more than its face value, and has become known in some
circles as a “Bin Laden”, according to the study.
“Such notes are the (payment; mechanism; preferred) of those pursuing illicit activities, given
the anonymity and lack of transaction record they offer, and the relative ease with which they
can be transported and moved,” it said.
Removing (gold; potential; high-value; mine) bills from circulation would have little impact on
legitimate business, but eliminating them “would make life harder for those pursuing tax
evasion, financial crime, terrorist finance and corruption” and “disrupt their business models.
www.washingtonpost.com/news/wonk/wp/2016/02/16/its-time-to-kill-the-100-bill
VIII. Find the appropriate adjectives order:
1. A different kind of loan product is growing in popularity and may offer you more
flexibility beyond the (lending; standard) options.
2. Among that group of (loan; personal; prospective) borrowers, 18% were 18- to 29-year-
olds.
3. The (three; credit; top; reporting) bureaus expect the amount personal loan borrowers
take out will increase in 2016.
4. Banks often seek out (business; local; prominent) owners and managers to sit on the
bank’s board of directors.
5. It’s also made it much trickier for companies with (credit; lower) ratings to access
funding.
6. Others need to roll over existing debt or to repay (bridging; short-term) loans they took
out to finance acquisitions.
7. The (business; free; productivity) tools are worth checking out.
8. Kolab is an (group; collaboration; open-source) server.
9. Asset prices have recovered from their (financial; global; crisis) lows.
10. Investors sought safety by investing in an (narrowing; ever-lasting) group of predictable
earners.

XIX. Translate the following:

 pre-war economic downturn
 secure monetary policy
 global financial markets
 international financial institutions

XX. Make adjectives from the words in brackets and give them the appropriate form:
1. Analysts warn that this severe tightening in the US bond market is (worry).
2. We are (shock) by the (shock) evolution of the stock exchange figures.
3. The manager was (confuse) by the (confuse) planning experts.
4. The Irish famine had been (aggravate) by a grave commercial crisis in England.
5. Now that we were financially (settle), she let it be known she too was ready to embrace
motherhood.
6. It is gratifying to see such good results.
7. They gave a convincing demonstration of the car's safety features.
8. She was really disappointed that she didn't get the job, but she's gotten over it.
9. His lack of response didn't mean he wasn't aware, and she didn't want to leave him
(worry) that she might do such a thing.
10. She was (tire) of the stock exchange game.

TRANSLATION

XXI Translate into English and comment the following saying by your own words
A)
1. Banul economisit are valoare dublă.
2. Banii chivernisiți, oricând sunt bine folosiți.
3. Cine economisește, niciodată nu-i lipsește.
4. Cine pune ban pe ban, mult adună într -un an.
5. Succesul este înălţimea la care ajungi după ce te-ai ridicat de jos" - General George Patton
a. http://www.economica.net/25-de-citate-de-business-pentru-
 2013_41392.html#ixzz40eDYv2Ze
6. Un om de succes este cel care își construiește afacerea din pietrele pe care alții le-au aruncat
în el. – David Brinkley
7. Prea mulți oameni cheltuie bani pe care nu i-au cîștigat pentru a cumpăra lucruri pe care nu și
le doresc, pentru a impresiona oameni pe care nici măcar nu îi cunosc – Will Rogers.
8. Afaceristul autentic învață să depășească orice obstacol și să meargă mai departe și atunci
când eșuează.
9. O afacere care produce doar bani este o afacere nerentabilă.– Henry Ford
10. As vrea să trăiesc ca un om sărac cu o mulțime de bani. Pablo Picasso
a. Sursa: Investinganswers.com
B) Find the corresponding sayings in Romanian
1. There isn’t such thing as a free lunch. (Robert A. Heinlein. The Moon is Harsh a Mistress
2. Bad money drives out good. English proverb, early 20th century; known as ‘Gresham’s law’
from Thomas Gresham (d. 1579), English financier and founder of the Royal Exchange.
http://blog.oup.com/2009/11/proverbs/#sthash.F21zItqy.dpuf
3. Money has no smell. English proverb, early 20th century in this form, but originally deriving
from a comment made by the Roman Emperor Vespasian (AD 9–79), in response to an
objection to a tax on public lavatories; compare Where there’s muck there’s brass below.
http://blog.oup.com/2009/11/proverbs/#sthash.F21zItqy.dpuf
4. Money is the root of all evil. English proverb, mid 15th century, deriving from the Bible (I
Timothy 6:10), ‘The love of money is the root of all evil’.
http://blog.oup.com/2009/11/proverbs/#sthash.F21zItqy.dpuf
5. Where there’s muck there’s brass. Dirty or unpleasant activities are also lucrative (brass here
means ‘money’); English proverb, late 17th century.
http://blog.oup.com/2009/11/proverbs/#sthash.F21zItqy.dpuf
C)
Nevoia pentru o organizație ca Fondul Monetar Internațional a devenit evidentă în timpul Marii Crize
care a distrus economia mondială în anii 1930 și care a avut un impact foarte puternic asupra tuturor
formelor vieții economice. Băncile au dat faliment cu miile, prețurile din agricultură au cazut sub prețurile
de productie, fermele abandonate s-au transformat în locuri sălbatice, fabricile și-au inchis porțile, flotele
așteptau în porturi încărcătura care nu avea să vină, ăi zeci de milioane de muncitori umblau pe străzi în
căutarea unei slujbe.
Criza a fost la fel de distrugătoare pentru lumea nevăzută a finanțelor și a schimbului monetar. Lipsa de
încredere generalizată în banii scripturali (fiduciary money) a dus la o cerere pentru aur ce nu a putut fi
acoperită de trezoreriile naționale. Un număr de națiuni au renunțat la etalonul aur, acest lucru conducând
la complicarea schimburilor comerciale, căutându-se chiar modalități de plată gen barter (o locomotivă
pentru 100 tone cafea), ceea ce elimina folosirea banilor în totalitate.
Cooperarea internațională se impunea prin stabilirea unui sistem monetar inovativ și a unei instituții
internaționale care să-l monitorizeze.
Harry Dexter White din SUA și John Maynard Keynes din Regatul Unit, propun un asemenea sistem la
inceputul anilor '40, sistemul urmând să încurajeze convertirea nerestrictionată (unrestricted conversion)
a unei valute în alta, să stabilească o valoare clară și fără echivoc pentru fiecare valută și să elimine
restricțiile și practicile gen devalorizare competitivă (competitive devaluation).
După o perioadă lungă de negocieri în condiții dificile impuse de război, comunitatea internațională a
acceptat sistemul și organizația care să-l urmărească: 44 de țări și-au trimis delegații reuniți la Bretton
Woods, New Hampshire, SUA, în iulie 1944. FMI și-a început activitatea la Washington DC în mai 1946,
având 39 de membri.