There are seven members of the policy board, four of whom are appointed by the cabinet and approved by both houses of the Diet (Japanese Parliament). There are four representa­tives from private industry, one from the Bank of Japan and two from the government. The government members, taken from the Ministry of Finance and the Economic Planning Agency, do not have voting rights.
Germany — Key Interest Rates. The rates to watch are:
Repo rate — sets the tone for money market rates.
Discount rate — sets the floor for money market rates. Lombard rate — sets the ceiling for money market rates. The repo rate is now the main tool for guiding the over­night money market rate. Repos enable the Bundesbank to ad­just monetary policy without changing its headline rates. A change from a fixed to a variable rate repo (or vice versa) may indicate a policy change. But while higher rates at a variable rate repo reflect higher bids for funds by banks, they do not necessarily point to tighter policy in the short term (and vice versa).
The discount rate normally sets the floor for money market rates while the lombard rate usually sets the ceiling. Thus, the discount rate is more important when interest rates are falling while the lombard rate is the kev rate when interest rates are ris­ing.
The Bundesbank's main instruments are either desiened for long mn major policy changes or to fine tune the money market.
The Bundesbank sets monetary oolicv and is the most in­dependent of the Group of Seven central banks. It has a legal ob­ligation to protect the external value of the mark. Without preju­dice to the performance of its functions, the Bundesbank is required to support the general economic policy of the federal government. In using its powers under the Bundesbank Act, the central bank is independent of instructions from the federal government.
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Bundesbank — Öåíòðàëüíûé áàíê Ãåðìàíèè
î
Lombard rate — îôèöèàëüíàÿ ñòàâêà
öåíòðàëüíîãî áàíêà ïî
êðåäèòàì êîììåð÷åñêèì áàíêàì, îáåñïå÷åííûì öåííûìè áóìàãàìè (ÔÐÃ)
åý
variable — ìåíÿþùèéñÿ
to fine tune — îñóùåñòâèòü «òîíêóþ»
íàñòðîéêó
å
prejudice — ïðåäðàññóäîê

Comprehension Questions

1. What are the key interest rates in the USA, Japan and Germany?
2. Which of them is a better instrument for guiding the money market rate?
3. Why didn't the Fed publish the fund rates?
4. How does BOJ influence interest rates?
5. What do Discount and Lombard rates set in Germany?
6. Which of the two rates is more important when interest rates are falling?
7. Which central bank of the Group of Seven is more independent?
8. When did the Fed announce a rise in interest rates for the first time?
9. When do financial institutions borrow from the Fed's discount window?
10. Does the Fed require presidential approval to change interest rates?

Exercises

Ex. 1. Learn the vocabulary.
Ex. 2. Put questions to the underlined words.
Ex. 3. Make a syntactical analysis of the subordinate clauses (state what kind they are).
Ex. 4. Choose verbals and state their syntactical function in the sentence.
Ex. 5. Translate the texts.

Ñîäåðæàíèå ðàçäåëà

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