Kapitalgesellschaft / spoločnosti

 in the private sector: is formed with a view to

making a profit for its members by engaging in

Companies-UK manufacturing, trading or the provision of

services.
 Its capital is divided into shares – it is raised by
Corporations-USA each member taking a certain number of
shares, which are paid for in cash or given in
exchange for some other consideration.
 The MEMBERS are called SHAREHOLDERS
(stockholders USA)
 a legal entity – it has a legal existence separate
1 from that of its members. The company itself is
owner of all business assets and liable for all
its debts and obligations.
AG
Large companies  permitted to issue shares to the general public
 if they wish shares are traded on a stock
PLC exchange

public limited companies (UK), open corporations (US)

1
GmbH
Small companies  ownership is restricted to 1 or a few
shareholders
Ltd  no access to a stock exchange

private limited companies (UK), close corporate (US)

1

 UK: companies may be incorporated (eine Firma

Company – types of als Kapitalgesellschaft eintragen)
1. By registration under the Companies Acts
companies (most important/common method)
2. By royal charter
1 3. By statute (=passing a special Act of
Parliament)
  Members have unlimited liability= fully liable
Unlimited companies for all debts and obligations

1
 Members are liable for the company’s debts
Companies limited by up to a stated limit
 Suitable for NPOs
guarantee
1
 Members liability is limited to the issue price
Companies limited by of shares held by them
 Public and private limited companies
shares 

Adopted by most for-profit businesses
Account for the majority of registered
1 companies

AG
 its authorized and issued capital must not be
less than 50.000 pounds, of which at least 25%
Public limited 
must be paid up at the time of incorporation
it need NOT necessarily offer its shares to the

companies (PLC) 
general public but may sell them privately
shares which are freely transferable may be
1 sold to the general public: by a public offering

GmbH
Private limited  MUST NOT offer its shares/corporate bonds to
the public
companies (Ltd) 

no minimum capital requirement
majority of them are small family businesses
1 run as companies to profit from the benefits of
continuity and limited liability
 ISSUE SHARES !!
AG
Open corporations 

publicly held corporations
Its shares are hold by a large number of people
(British PLC)
Public limited companies

1
 GmbH
Close corporations  A small number of shareholders
 May dispense entirely with the board of
(British Ltd) directors by including a provision to this effect
Private limited companies in its articles of incorporation (Kann ganz auf den
Verwaltungsrat verzichten, indem er eine entsprechende
Bestimmung in seine Satzung aufnimmt)
1
Körperschaft, juristische Person/ právnická osoba
1
Corporation  a group of people who have formed
themselves into an association having a legal
1 existence separate from that of its members
Kapitalgesellschaft, börsennotierte AG, Konzern/ obchodná
2
Corporation spoločnosť
 American corporation is the equivalent of a
British private limited company(Ltd) or public
limited company (PLC)
1  refers to a publicly held corporation.
 They have subsidiaries (dcérska spoločnosť)
 a group of companies.
wirtschaftl. Unternehmen der öffentl. Hand/združenie
Corporation3  UK = PLC
 a public corporation
 created by an Act of Parliament and both
owned and controlled by the government
1
Gang an die Börse/ ponúkanie akcií na burze
Going public  UK= public limited company (PLC)/AG
 USA= open corporation
Taking a company public - Floating a  is permitted to offer its shares to the general
company - Flotation of a company - public and have them listed on a stock
exchange
Initial public offering (IPO)  Initial public offering: traded on a stock
exchange for the 1st time
 If such a business needs more capital for
1 expansion
 If SHAREHOLDERS want to convert their
holdings INTO CASH!!
 Börsengang
Initial public offering  shares of a company are traded on a stock
exchange for the 1st time
(IPO)  organized generally by public offering (going
public)
 most common: fixed price
😊
1. need for more capital=expansion of capital
2. desire of existing shareholders to CASH in by
selling all or some of their shares
☹
1. Disclosure requirements for companies
quoted on a stock exchange are much stricter
and more extensive than for unlisted
companies
2. Pressure by the investing community to make
short-term profits will increase
3. Large shareholders reverse the process: they
take their firm private by buying up all its
1 shares and then withdrawing from the stock
exchange
Geschäftsleitung, Führungskräfte
Management1  group of people who control the business
organization: a public limited company/
corporation
 includes the executive directors and the
managers ranking below them
1. Senior management (split into top and senior
executive) led by CEO and his deputy
(Stellvertreter) who work closely with the board of
directors
2. Middle management many responsibilities of
the highest ranking officers are delegated to
this section
3. Junior/lower management
Senior: CFO
Middle: Those reporting to him (chief accountant/regional
finance managers)
Junior/lower: bookkeepers, collection manager
1
  they all receive a SALARY from their company
Managers like other staff
 not normal employees
 they represent the interests of the company’s
owners (its shareholders) vis-à-vis its workers
 are rarely members of trade unions but have
their own organisations
1  prepare and make decisions and make sure
that they are carried out accordingly
 management:
Qualitative techniques 1. by objectives,
2. by results
1
3. by exception

 network analysis,
Quantitative techniques  simulation,
 risk analysis,
(operations research)  decision trees
1  linear programming

2 Unternehmensführung
Management  all activities involved in running a business
organization
Essential tasks of management include:
 Identifying, formulating and setting objectives
 Planning: long term (strategic) and short term
(tactical) plans
 Establishing and maintaining a suitable
organization
 Implementing: delegating, motivating and
commanding
 Controlling: measuring performance, comparing
results with predetermined objectives, taking
corrective actions
 Communicating with other members of the firm
 Establishing and maintaining contacts with the
outside world; representing the company in
negotiations with customers, suppliers, trade
unions etc.
1
  management style – used by executives
the style of leadership 1. ☹authoritarian (little confidence in
subordinates, no employee participation in goal-
setting and decision making, motivation by fear,
threats and punishment)
2. 😊co-operative (motivation by participation
and involvement, complete trust in
subordinates)
3. humanitarian
1 Firms with a more co-operative style are more likely
to have a continuous record of high productivity
Führungskraft, leitender Angestellter/vedúci úradník
Chief Executive Officer/  top-level managers in an organisation
 accountable for the operation of the company
CEO  runs the board meeting
 runs the company
 board of directors can fire CEO
 CEO, all other executive directors, and those
top-level managers reporting to them
 Field executives (salesperson/salesrepresentative)
 Account executives (employees of
banks/advertising agencies)
 denotes things belonging to or reserved for
1 top-level managers
Gründung (einer Kapitalgesellschaft)
Incorporation Before a company is set up, its promoters must enter into
negotiations on the acquisition of land, buildings and

of a company other property

The formalities:
1. Prescribed documents (prepared by a solicitor)
právny poradca/Rechtsanwalt Include:
1. the firm’s memorandum of association,
(articles of incorporation, charter)
2. articles of association, (BYLAWS)
3. list of names of the first directors
4. statement of the amount of capital the
company is permitted to issue

After payment of the proper fees a certificate is granted:

1. PRIVATE limited company (Ltd) can start
business immediately
2. PUBLIC limited company (PLC) has to comply
with other requirements and receive a trading
certificate from the Registrar
1
Every company has to hold a general meeting where
the STATUTORY REPORT and any matters regarding
incorporation are discussed

Memorandum of association- UK
articles of incorporation/charter-
USA
1
Articles of association- UK
Bylaws- USA
1
Company – legal aspects,
management and control
2 
Gründungsvertrag/ spoločenská zmluva
 defines the company’s powers and regulates
its relations with the outside world
 must contain: name, location of the company,
objects (activities the firm is allowed to engage
in), limitation of liability, amount of nominal
share capital and its division into shares
interne Vorschriften/interné predpisy
 regulate the company’s INTERNAL affairs !!!:
rules of procedure at meetings, voting rights of
shareholders, powers and duties of directors
Kapitalgesellschaft – juristische Aspekte, Geschäftsführung,
Verfügungsgewalt
 legal entity: having a legal existence
independent of that of their individual
members
 separation of ownership (shareholders) and
management (board of directors)
 can act only through its constituted agents
 The members cannot be held individually
responsible for its action
 owner of its business assets and liable for all
its debts and obligations
 The company has its own “life” neither the
death of a member nor a transfer of shares
affects the existence of the enterprise. It can
enter into contracts, hold property, buy and
sell or sue (verklagen/žalovať)
 The liability of its shareholders is limited to
the issue price of the shares held by them
 If the company fails a shareholder is
personally liable only for any amount
remaining unpaid on the shares held by him
 Control (voting) by shareholders at AGM but
NOT management
 End: by winding up or liquidation. (eine Firma
schließen/auflösen)
When a company is wound up or liquidated:
FIRST: its CREDITORS are paid
LAST: remaining amount of money is
distributed to its SHAREHOLDERS !!!
  Liquidation may follow a decision at a general
voluntary liquidation meeting of shareholders

 Liquidation may be ordered by court

compulsory liquidation
2

Offenlegungspflichten/odhalenie
disclosure requirement  The act of releasing all relevant information
about a company that may influence an
investment decision
 Every year a company must send a copy of the
directors’ annual report, of audited balance
sheet, of profit and loss account to the
2 Registrar of Companies
 It must keep statutory (gesetzlich) books (register
of members), minutes books (das Protokoll führen)
and proper books of account showing receipts
and payments, details of assets and liabilities
Kapitalgesellschaft – Vor-und Nachteile
😊
Company–  Continuous existence, independent of its
members or directors
advantages and  FREELY TRANSFERABLE SHARES !!!
 The shareholder’s liability is limited to the
disadvantages issue price held by them
☹
 Publicly/Disclosure requirements make it
difficult to conceal their business affairs
 The directors and managers have direct
control over the company’s affairs without
being accountable
 Conflicts between shareholders its directors,
managers and its workers
 Lack of personal contact with customers and
employees
 Slow and inflexible decision-making
2
Kapitalgesellschaft – Gesellschaftsrecht/ zákonodarstvo
Company– legislation  detailed legal regulations designed to protect
shareholders, creditors and the general public
from possible abuses of the legal entity
2 concept
 Aktionär, Gesellschafter einer Kapitalgesellschaft
Shareholders - UK  owners of the company’s shares
 DO NOT OWN the company itself
Stockholders – US  They share in the company’s profits in
accordance with the size of their holdings

Company’s owners Profits are distributed in the form of a cash
dividend
 The liability is limited to the issue price of the
shares held by them.
 personally liable only for any amount
remaining unpaid on the shares held by him
 power is exercised by voting at meetings, at
the annual general meeting (AGM).
 They have ultimate control of the company
 They are NOT ALLOWED to participate in
management as this is the task of the board of
directors (elected by the shareholders) and of
paid managers (selected from among the
directors or recruited from the outside).
methods of becoming a member:
 by subscribing the memorandum of
association (Gründungsurkunde)
 by applying for an allotment of shares (Zuteilung
von Aktien)
2  by having shares transferred from an existing
member
Gesamtrendite für Aktionäre, Eigentümerwert
Shareholder value  total return to shareholders
 reminder to managers to ensure that the
shareholders get as much as possible of the
value generated by their company
 other stakeholders (employees) receive less
 associated with ruthless cost-cutting,
downsizing and redundancies
 A low share price may seriously affect a
2 company’s ability to raise fresh capital and will
make it vulnerable to takeover bids (anfällig für
Übernahmeangebote)
 Gestaltung und Umsetzung der Unternehmensverfassung
Corporate governance  Complex organisations involving different
STAKEholders (shareholders, employees, executive
directors, top-level managers, non-executive directors,
customers)
 to focus public attention on the various roles
the STAKEholders play in a company and on
how power is or should be distributed among
them.
corporate governance issues (Probleme):
 Shareholders involvement – to what extent and
how should shareholders get involved in managing
their company?
 Shareholder value – how much of the value
added by a company should go to its shareholders?
 CEO duality – Should the CEO of a company
double as its chairman, or should there be an
2 outside chairman (Vorsitzende/Predseda)
Führungsgremium einer britischen/amerikanischen
Board of directors Kapitalgesellschaft, Aufsichtsrat, Verwaltungsrat
(predstavenstvo)
 Appoint the CEO
 They represent the interests of shareholders
 Provide advice and insights
 Has legal rights
 Make stock and big financial or acquisition
decisions
 Has ability to fire CEO
 a group of people elected by the shareholders
at the annual general meeting
 not required to be a member of the company
 UK: board of a PUBLIC limited company (PLC)
must consist of >2 directors
in PRIVATE limited companies (Ltd): just 1
 US: business corporation act >3 directors
 The powers are laid down (festgelegt) in its
articles of association (bylaws) and are vested
in (eingeteilt) the directors collectively
 directors elect a permanent chairman, who
takes the chair at board meetings and also
presides over meetings of the shareholders
 responsible for MANAGEMENT and
SUPERVISION (Kontrolle)
 general company policy and supervises day-to-
2 day management
  Are governed by a UNITARY BOARD (may or may
American and British not include non-executive or outside directors)
 permits that a board member may be
company law 
appointed as manager (executive directors)
comprise executive (full time, inside) and non-
2 executive (part time, outside) directors
 have two boards : two-tier board system
Austrian and German law  no member of the supervisory board (Aufsichtsrat)
2 may at the same time be a member of the
management board (Vorstand)
Vorstand, Geschäftsführer/ výkonný riaditeľ
executive director  “full-time” or “inside” director
 member of the board
“board of management”  carries out his board duties and management
2 functions
Aufsichtsratmitglied/ Čestný člen správnej rady
non-executive director/  “part-time” or “outside” director
 member of the board
outside director  helps to plan, decide and supervise the
company’s policy
 has NO management/executive
responsibilities himself
“supervisory board”  has NO contractual relationship with
company, due to his independence, experience
2 and knowledge
 contibution to strategic (long term)
OUTSIDE DIRECTORS  receive a FEE,Not salary !!!
management
Vorsitzende/Predseda
Chairman  either an executive or a non-executive director
 the head of its board
 senior board member
 CEO can be the Chairman at the same time
 To advise CEO and be available for board meetings
 He is the firm’s leading representative in its
dealings with the outside world
 “Chief operating officer” (COO) reports to the CEO and
deputises for him
 a company that has a non-executive chairman the
managing director/president is the CEO. A large
company would additionally appoint an executive
director as its COO.
 Option: to combine the roles of managing
2 director/president and chairman in a single person,
making that person the CEO
 Jahreshauptversammlung/ ročné plenárne zasadanie
Annual general meeting  FIRST general meeting = STATUTORY meeting
 The principal meeting of SHAREHOLDERS
(AGM)  voting power is proportional to the number of
shares held
 in every calendar year to provide its members
with the opportunity to express their collective
will
 No business may be conducted unless a
specified minimum number of members (min.
2 members) are present
 Each member has the right to attend a general
meeting in person or by a proxy
(Stellvertreter/zástupa) who need not be a member of
the company himself
 resolutions are passed by a majority of votes
(Resolution verabschieden/uzniesenia)
 Minutes must be kept of all general meetings
and signed by the chairperson
The agenda of an AGM usually comprises:
 Declaration (vyhlásenie) of a dividend
 Consideration of the company’s accounts
 director’s report
 (re-)election of directors
2  Appointment and remuneration of auditors

 Any general meeting which is not an (AGM)

extraordinary general  may be convened at any time by the directors
 a qualified minority of shareholders may also
meeting request one in which case the directors must call it
(eine Versammlung einberufen)
2
 Fusion/ zjednotenie, zlúčenie
Merger/ Acquisition  a new business is created
1. A large firm swallows up or absorbs a smaller
one (Fusion durch Aufnahme)
2. Merger: 2 or more companies merge into a
new one=All the original companies lose their
identities (amalgamation)
3. Acquisition: One company acquires a majority
interest in another, making it a subsidiary. A
larger firm buys a smaller firm (unechte Fusion)
 will only be successful if the businesses
involved fit together well
😊
 ECONOMIES OF SCALE (Größenvorteil/ úspory z veľkosériovej
výroby) => cost advantage of producing on a larger
scale. As output increases, cost per unit falls.
 Cheaper borrowing as firm gets bigger,
 less risk  can diversify into different areas,
 discounts for bulk buying can negotiate better
terms
 can use mass production techniques
 ECONOMIES OF SCOPE/SYNERGIES (Einsparpotenzial/
úspory zo sortimentu) => between a bank and an
insurance company: when 2 companies join
together, the overall performance will be better
than the sum of the two firms individually
☹
 clash (Konflikt) of corporate cultures – people may not
3 get along with each other
(öffentliches) Übernahmeangebot/ ponuka prevzatia
Takeover bid- UK  one business takes control of another business
 😊friendly/agreed
Tender office- USA  ☹hostile/unfriendly/contested
defensive measures:
1. white knight= called in to fend off the
unwelcome suitor
2. poison pills= take on huge debts/grant
shareholders favourable stock options
 cash bid= cash
 paper bid= securities of the bidding company
 combination of the two
3  leveraged takeover/buyout= financed by
loans/junk bonds
 Alternativer Firmenübernehmer/Übernahmeangebot
“White Knight”  a third company may be called in to fend off
the unwelcome suitor/bidder by taking over
the target company (and not the suitor)

3
Giftpille, Übernahmeabwehrmaßnahme
“poison pills”  target company takes on huge or grants
existing shareholders favorable stock options
3
to dilute the bidder’s position
Erschöpfung der Einnahmen /vyčerpanie výnosov
“leveraged  A takeover financed mainly by bank loans/
junk bonds
takeover/buyout”  the acquisition of another company using a
significant amount of borrowed money to
meet the cost of acquisition
 The assets of the company being acquired are
often used as collateral (Sicherheit) for the loans,
along with the assets of the acquiring company
 The purpose is to allow companies to make
large acquisitions without having to commit a
lot of capital

3
Unternehmensaufkauf; Übernahme eines Unternehmens/
Buyout skúpenie
 Taking over a company/purchasing at least a
controlling percentage of its stock
 “management BUYOUT”: acquired by its OWN
management !!!
 “management BUY-IN”: OUTSIDE management
team (MBI) !!!
 “employee buyout”: acquired by its employees
 “leveraged buyout”: mostly raised from banks or
through junk bonds

3
 Konzern/ Skupina spoločností
Group of companies  One company (parent/holding company)
controls one or more subsidiaries (>50% of
equity capital)
 Also possible for the parent to aquire an
existing firm
1. Wholly-owned subsidiary: 100% hold
subsidiaries
2. Associated company: 20-50% hold subsidiaries
3. Conglomerate: subsidiaries operate in
completely unrelated industries
4. Multinational group: has subsidiaries in at
least two foreign countries
 single enterprises, BUT each member has a
legal personality
 must publish accounts to its activities and
publish consolidated accounts of the group as
a whole
3

Muttergesellschaft/ materská spoločnosť

1. holding/parent  any company that controls at least one
subsidiary (>50% of subsidiarie's equity
company capital)
 pure/non-operating= restricts its activities to
the management of the subsidiaries, carries
out financial and corporate planning for the
subsidiaries and performs general
management services for them
 operating = additionally engages in the
3
production and distribution of goods/services
Tochtergesellschaft/dcérska spoločnosť
2.Subsidiary  may be set up by the parent company
OR
 parent company acquires >50% of the equity
of an existing firm
1. wholly-owned = parent holds
3 100% of equity
2. associated company = parent
holds 20-50% of equity
 enterprises controlled by its subsidiaries
3.Sub-Subsidiary
3

Vertical integration
Horizontal integration/
lateral integration
3
Conglomerate/
diversification
3  has a large number of diversified business
Forward integration
 DISTRIBUTION, RETAILER
3
Backward integration

3
Multinational corporation (MCN)
3  has subsidiaries in at least 2 foreign countries
 businesses from different stages in the chain of
production and distribution are combined
(Example: a retailer and a wholesaler)
 businesses from the same stage are combined
(Example: two retailers/wholesalers,
manufacturer buys a competitor, Marriott
hotel buys Starwood hotel to become world’s
largest hotel chain)
Mischkonzern
 subsidiaries operate in completely unrelated
industries (e.g. beverages, textile, food)
 a corporation which consists of several smaller
companies with different business activities
 for exmple: SAMSUNG, the electronic giant also
makes military hardware, apartments and ships
 merger brings the firm nearer to the consumer
 manufacturer buys a distributor
 move up to the Supply Chain
 for example: Booker Group cpompletes $40m
takeoversof Londis and Burgens
 RAW MATERIAL, MANUFACTURING,
 merger brings the firm nearer to the source of
the product
 a retailer buys a wholesaler
 move down to the Supply Chain
 for example: IKEA buys forests in Romania
 RAW MATERIAL, MANUFACTURING,
DISTRIBUTION, RETAILER
Multinationales Unternehmen, Konzern/mnohonárodná
spoločnosť
 Monopol
Monopoly  the only/dominant supplier in a market
 only one seller of a particular product
 😊 it is easier to increase prices without a
substantial decline in the quantity demanded
>no close substitutes for the product
 To achieve the goal a company operating in a
market with many sellers may try to buy up its
competitors in order to exert control or it may
3 join forces (sich mit jemanden zusammenschließen) with
them to form a cartel
 state-owned/controlled railway enterprises,
natural monopolies post, telecommunications, water, gas
electricity
 competition would lead to duplication and a
waste of resources (Wettbewerb würde zu
Doppelarbeit und Ressourcenverschwendung führen)
 high fixed costs and other barriers to entry
3 give one business an overwhelming advantage
over potential competitors, making it the
ONLY supplier in the industry
 intellectual property (geistiges Eigentum)
State-created monopoly  to avoid wasteful competition
3  by granting artists, inventors and firms the
exclusive rights to use their works of art,
inventions and brands
Kartell
Cartel  voluntary association of business enterprises
on a contractual basis (production, sales and
prices)
In restraint of trade (Handelsbeschränkung)
Gentlemen’s agreement, conscious parallelism,  fix prices
resale price maintenance, price ring, pool, trust  restrict output (by assigning (durch Zuweisung)
production quotas to their members)
 divide/carve up markets (Märkte aufteilen)
 have their own selling organisations
3
wettbewerbshemmender Unternehmenszusammenschluss
Trust (Kartell, Monopol)
 combination of firms formed with the
intention of restricting competition
created in a number of ways:
1. By establishing a trust in the legal sense of the
word
2. By setting up a holding company
3. By entering into an explicit or implicit contract
to restrain competition
3
 Kartellrecht/ protimonopolné zákony
Antitrust laws/  Rules and guidelines
 aim to ensure fair competition
Competition laws/regulations  to protect consumers from predatory business
3 practices
Privatisierung
Privatization  The SALE of state-owned assets or businesses
3 to the private sector

Finanzielle Darstellung des gesamten Konzerns

Consolidated accounts  Financial statements relating to the business
activities of an entire group considered as
3 a single business organisation
Kapitalwirtschaft betriebliche Finanzwirtschaft
Financial management
 planning, implementing and controlling al
 raising (sourcing) (Mittel beschaffen) and allocating
(using) (Zuteilung) the funds
Funds may be raised:
1. Internally: owner’s funds, retained earnings,
financial resources provided by shareholders. The
revenue generated by selling goods, services,
capital assets
2. Externally: creditor’s funds, funds obtained from
outside sources. Funds provided by the company’s
owners= partners shareholders, creditors
4  project planning, mergers and acquisitions
 inflows and outflows of funds

 working capital management, capital proj

Umsatzerlöse/ Tržby
Sales revenue  as cash expenditure on materials, labour
services (als Barausgaben für Materialien,
4 Arbeitsleistungen)
Bargeldumlauf/ peňažný tok
cash flow  what is left over can be allocated for
investment purposes or to repay debts
4
Budgetierung/zostavovanie rozpočtu
budgeting  The planning process in the field of financial
management
4
 Barmittel, finanzielle Mittel/peňažné prostriedky
Funds  refers to CASH (i.e. banknotes, coins, current
account balances at banks)
 financial resources that can be converted into
cash
Kapital/ základný kapitál
 the capital of a company „shareholder’s
4 funds“
Finanzierung, Mittelbereitstellung/ financovanie
1
Funding  denotes the provision of pecuniary (finanziell)
resources for a particular purpose
 synonym for financing
4
Kapitalstruktur/ štruktúra kapitálu (pomer medzi cudzími a
Capital structure/ vlastnými zdrojmi)
 composition of its capital

Capital ratios  relative shares of creditors‘ funds (debt) and

owners‘ funds (equity)
4  The relationships between these two= capital
(structure) ratios

Eignervermögen, Eigenkapital/ vlastné zdroje, vlastný kapitál

Equity capital/ 

equity
retained earnings (Gewinnrücklagen)
owner’s funds/ 

owner’s funds in a business organisation
not only liquid, but also in form of invested
assets
shareholder’s funds  They are called the financial resources
4 provided by shareholders
 Funds INTERNALLY !!!
Aktie/ podiel
Share- US  any parts into which a company’s capital is
divided, entitling its owner to a proportion of
Stock- USA the profits (einen Anspruch auf einen Anteil am Gewinn haben)
 right to vote at general meetings of the
company
 has a nominal: a certain sum of money is
shown on the face of the certificate
 many companies issue them above par (at a
premium) or below par (at a discount)
 prohibited under Austrian law to allow for
last-minute changes in market conditions
Austria: Issues below par are prohibited
US and Canada: companies are permitted to issue
4 “no-par-value” shares (no face value): dividends have
to be expressed as a fixed amount of money per
share
 Dividende
Dividend  (“Thank you to Shareholders” = a company pays its
shareholders just for being a shareholder)
 portion of its profits which is distributed to
the Shareholders
 paid out annually or twice a year
 percentage of the face value or as a fixed sum
 usually paid out in cash (“cash dividend”) or in
shares (“stock dividends”)
dividend policy:
1. which portion should go to the shareholders
2. what portion should be retained in the
business (ploughback or self-financing)
 insufficient profit: no declaration in that year or
getting back on reserves, if any
4
Selbstfinanzierung, Gewinnthesaurierung/ investovať zisk,
Ploughback investovať späť
 self-financing
 not distributing all its profits to its owners or
shareholders, but retaining (Gewinne einbehalten) a
portion to be used for investment in current
and fixed assets or to retire debt
 not free
 Retaining a portion to be used for investment
in current or fixed assets or to retire debt
4

Fremdkapital, Fremdmittel
Creditor’s funds  „debt “(Schuld)
 all funds supplied by a firm’s creditors
 supplier credits, overdrafts, and medium-or
longterm bank loans
 Loan capital/ borrowed capital: medium-to-
long-term variety
 creditor’s funds have to be repaid at maturity
(=the date agreed for repayment)
 Large loans repayable in instalments
(=multiple repayment dates)
 discount method: interest payable in advance
4  collect method: during its term, or at maturity
 bank charges or compensatory balances
 funds EXTERNALLY !!!
 Fremdkapital/kapitál, cudzí
loan capital/  the medium-to-long-term variety of funds
 supplied by a firm’s creditors
borrowed capital
4

Lieferantenkredit/ úver, obchodný

Trade credit- UK  a customer purchases goods from a seller who
allows the purchaser to pay for those goods at a
Supplier credit -USA later time. In essence the seller is making a
short-term loan to the purchaser
 short-term financing (up to one year)
 A buyer is usually not required to pay for
goods/services on delivery, but is allowed a
specified period of time before payment is due
 supplier extends credit to his customer =
deferred payment terms
 Credit can be granted on an open account,
through the use of a time draft, by means of
promissory note issued by the buyer in favour
of the seller
4
Anleihe, Schuldverschreibung/cenný papier, dlhopis
Bond  A loan given to a company/government by an
investor
 debt security: a loan made by the holder to
the issuer
 it has to be redeemed (zurückzahlen)
 the holder has to be repaid by the issuer at
maturity
 The amount to be repaid (=redemption price)
 interest rate can be fixed (fixed interest bond)
or variable (variable-interest bond/floater)
 most bonds are interest-bearing securities
 non-interest-bearing: zero-coupon or deep-
discount bond
1. issued by central governments:
government stocks (UK), government bonds,
Treasury bonds (US),
2. issued by local governments: local
authority stocks, corporation stocks (UK),
municipal bonds (US)
3. issued by companies: corporate bonds
 high risk corporate bonds: junk bonds
4
 Kreditgeschäft der Banken
Bank lending  according to maturity (short-, medium-, long-
term)
 according to the purpose for which the funds
lent are used
4  according to the security provided by the
borrowers
Kredit, Darlehen/úver
Credit  synonymous with loan
 amount of money placed at a person’s or an
(to grant credit/loan/overdraft) organisation’s disposal, like a loan of money
4
(Kredit-) Sicherheit (für einen Kredit bereitstellen)
Security (for a loan)  include
 GUARANTEES (Bürgschaft)
 a third party undertakes to be secondarily
liable for the debt in question
 and PLEDGES(Pfand)
 shares, bonds or goods are delivered into the
4 custody (Verwahrung) of the lender for the term
of the loan granted)
 sometimes the lender has lien in real or personal
property and a mortgage (Kreditgeber hat ein Pfandrecht an
echtem oder persönlichem Eigentum /Hypothek)
 collateral security (Garantien durch Wertpapiere/ záruka istená
cennými papiermi)
Kreditsumme, Darlehenssumme/ základ pôžičky bez úrokov
Principal  used to describe an amount lent/borrowed
EXCLUSIVE of any interest payable on it
 It is frequently employed in conjunction with
interest “repayment of the principal and
4 payment of interest”

Zinsen/úrok
Interest  price charged by a lender for the temporary
use of funds
 a percentage per annum of the amount lent=
interest rate
 rate is determined by the borrower’s
creditworthiness, macroeconomic factors,
credit supply and demand, the rate of inflation
and monetary bonds
4
 Kontoüberziehung, Kontokorrentkredit/dočasný úver,
Overdraft prečerpanie kreditu
 extent to which a current account at a bank is
overdrawn
 are a flexible credit option applied to your bank
account= only used when needed
 short-term loan
 EASY to arrange
 higher interest rate than a bank loan
 excellent for helping business handle seasonal
fluctuations in cash flow or when the business
runs into short-term cash flow problems (a
major customer fails to pay on time)
 external source of finance
 a bank permits the holder of a current account
to overdraw it up to a specified amount
 The account holder can draw on his credit line at
any time during an agreed period. If the
overdraft is repaid before this period has
expired, he is allowed to borrow again
 The bank may levy an additional charge called a
monthly charge/ commitment fee (fixed amount/
small percentage of the total credit line)
 The bank must have sufficient funds ready
against a possible call on its resources. The
account holder deposit easily saleable shares or
other property as security. (Der Kontoinhaber hinterlegt
leicht handelbare Aktien oder andere Vermögenswerte als Sicherheit.)

4
 Factoring/ finančné sprostredkovanie
Factoring  Way for business owners to get working capital to
run their business at the peace of mind to know
that they will get paid
 Medium/Short-term loan
 a commercial service designed to assist firms
selling goods and services on credit
a typical factoring agreement, a specialized financial
institution:
1. purchases all or a specific group of a seller’s
accounts receivable with or without recourse to
him for credit losses
2. advances an agreed percentage of the value of
the receivables to its client, thus refinancing the
supplier credits concerned
3. collects the amounts outstanding when they fall
due
4. performs additional services e.g. perform all
necessary accounting operations
 not free: a separate charge for each service
 is expensive but may be well for companies whose
expansion might be help up by a lack of liquid
working capital
 they are more likely than banks to grant credit to
young, undercapitalized firms because the
4 creditworthiness of the seller is less important
than that of its customers
Forderungen aufgrund von Warenlieferungen und
Accounts receivable Leistungen/pohľadávky, účty dlžníkov
 firm’s short-term claims, usually on open
Trade account receivable/trade debtor account, against trade debtors (dlžník v obchode)
 denotes amounts due from customers which
are collectible within one year, are not
evidenced by bills of exchange or promissory
notes, and arise from goods/services sold on
credit in the ordinary course of the business

4
Leasing/ einen Leasingvertrag eingehen
Leasing  a firm or private individual (lessee) acquires
from another party (lessor) the right to use the
objects for an agreed period of time
 The lessor retains ownership of the assets and
is rewarded for his services with rentals,
usually paid to him by the lessee at regular
4 intervals.
 alternative to buying assets
 Finanzinvestition, -anlage
2
Investment  used to describe the acquisition of financial
assets (Mittelherkunft) (bank deposits, shares, bonds or
Treasury bills)
 is undertaken to generate current investment
income (eine Investition vornehmen) (dividends, interest,
capital gains)
 The industry acts as an intermediary between
the ultimate providers and users of capital
5  comprises organisations like stock exchanges,
investment companies and banks
Kapitalanleger, Investor
Investor  the ulimate purchasers of securities
1. Private = rich individuals who put their money
into shares, bonds, property
2. Institutional = organisations such as insurance
companies, banks, pension funds, investment
funds
o they have more funds at their disposal (Mittel
zur eigenen Verfügung haben) than private investors
o enables them to pursue a more diversified
investment policy (eine Politik verfolgen); spread the
risk over a wider range of investment media,
shares, bonds, property
5 o play a big role in financial markets
Rendite, Effektivverzinsung/ výťažok, zisk
Yield  the income derived from a financial
investment, expressed as a percentage of the
value of that investment
 dividend yield =the last dividend expressed as
a percentage of the current share price
 earnings yield =earnings per share
 term is used in connection with dividends from
shares, interest bonds, rent from property
5
Portfolio, Portefeuille/ stav investícií, zoznam cenných
1
Portfolio papierov
 denotes the entire collection of financial
investments (shares, bonds…) held by a private
or an institutional investor
5  main task is to achieve the optimal mix in
terms of return and risk
 Investmentfonds/investičný fond
Investment fund  financial institutions set up for the purpose of
(zu dem Zweck) pooling the moneys of small
investors, putting them into a wide range of
securities and other investment media for the
benefit of their clients
 They are professionally managed, and should
therefore achieve a better return (Rückflüsse/Erträge
erwirtschaften) than a private investor
 They have more funds at their disposal than
private investors and can therefore buy a
greater variety of investment media to spread
5 the risk
Wertpapiere/cenné papiere
Securities  transferable certificates of ownership or
indebtedness (Verschuldung)
 They embody rights (Rechte beeinhalten)
 Traded on a stock exchange (shares or bonds)
5  Equity securities = ownership rights > shares
 Debt securities = creditorship rights > bonds

Eigentumsrechte/vlastnícke práva
Equity securities/  shares
 ordinary shares (blue chips)
Ownership rights
5
Gläubigerrechte
Debt securities/  bonds
 issued by government or companies
Creditorship rights  debentures/ “gilts”

5
Wertpapiermärkte/ Trhy s cennými papiermi
Securities markets  a framework for buying and selling securities
 concerned with long-term or permanent financial
instruments (shares or bonds) = CAPITAL MARKET
 Stock exchanges: are tightly organized, with
trading floors, strict adherence to business hours,
limitations on membership
 larger stock exchanges: amount to capital,
disclosure requirements and likelihood of an active
market
 Over-the counter markets: operate more
flexibly, relying exclusively on telephone and
computer links
5  Short term and deposits: MONEY MARKET
 Aktie
Share  parts into which a company’s capital is
divided, entitling its owner to a proportion of
the profits
 rights to vote at general meetings
5
erstklassige Aktien, Spitzenwerte/spoľahlivá akcia
Blue chips  top-quality, large-cap stocks = shares of big
companies with an excellent reputation
 premium status as investments

5
Anleihe, Schuldverschreibung, Obligation/ dlhopis
Bond  debt security = loan made by the holder to the
issuer
 fixed/income securities
 can be sold by their holders prior to maturity
 it has to be redeemed= the principal has to be
repaid by the issuer at maturity
 The amount to be repaid (=redemption price)
 interest rate can be fixed (fixed-interest-
bearing bonds) or variable (variable-interest
bonds/floaters)
 most bonds are interest-bearing securities
 non-interest bearing: zero-coupon or deep-
discount bond
1) issued by Central governments: government
stocks, gilt-edged securities (UK) government bonds,
Treasury bonds (US),
2) issued by Local governments: local authority
stocks (UK), corporation stocks, municipal bonds (US)
3) issued by Companies: corporate bonds
 high risk corporate bonds: junk bonds
 convertible bonds: to convert high risk
corporate bonds into ordinary shares at a
predetermined price and within a specified
period of time
 may be traded on a stock exchange
o bond yield= its annual interest payments
expressed as a percentage of its current
market price
o bond price
 are bought for this reasons:
1. for the interest income they generate
2. for possible capital gains =profits derived
5 from buying low and selling high
 britische Staatsanleihen/ Britské štátne dlhopisy
Gilt-edged securities-UK  gilts
 used to raise long-term funds
Government bonds- USA  important instrument of monetary policy
(Geldpolitik) in the context of open-market
5
operations
Primärmarkt, Emissionsmarkt
Primary market  where the stocks are created
 when a company decides to go public for the
first time by raising an IPO it is done in the
primary market
 here a company sells its shares directly to the
investors
 shares bought directly from a company
 market for new issues of securities
 the raising of fresh capital
 consist of loose associations of specialized
banks and investors, both private and
institutional
 less tightly organized than stock exchanges
5
(secondary markets)
Emission von jungen Aktien (auf Bezugsrechtsbasis) / právo
Rights issue súčasných akcionárov na nákupy za nižšiu cenu
 issue of new shares to existing shareholders
 company wishing to increase its capital
 cheaper and less complicated
 out of fairness to its members
 the increase in the number of shares will
reduce the earnings per share and possibly the
dividend per share= dilution
 new shares are offered to existing
shareholders on a pro rata basis: 1 new share
for every 3 shares held
 Shareholders may sell their rights= cash calls
 Shareholders have to fork out (Geld
5 lockermachen) large sums to protect their
interests in the issuing company
 UK: Emissionsgarantie; US: Fremdemission/ záruka na
Underwriting emisie
 specialised services offered by financial
institutions to companies that wish to raise
capital by issuing securities
UK: provision of a guarantee by an issuing house/
broker
US: “firm commitment underwriting” = an investment
bank buys the whole issue outright, and sells it at a
slightly higher price for its own account=bought deals
 offered by securities firms (issuing houses (UK);
investment banks (US))
 They form a syndicate to pool the risk involved
and to ensure a successful distribution of the
securities to be issued.
 The syndicate is headed by the lead or
managing underwriter who is normally the
5 original sponsor of the issue.
Emissionsgarant, Die Person oder das Konsortium verpflichtet
Underwriter sich, Mittel für die Ausgabe von Anleihen oder Aktien
bereitzustellen /osoba alebo syndikát zaväzujúci sa poskytnúť
finančné prostriedky za vydanie obligácií alebo akcií
 an issuing house, broker or investment bank
that engages in underwriting
5
(Wertpapier-) Börse/ burza cenných papierov
Stock exchange/  where the stocks are traded (gehandelt)
 after the shares are bought for the first time in
Secondary markets the primary market traders buy and sell these
shares among themselves in the secondary
market
 the issuing company is not involved directly in
any transaction
 market for securities issued by private
companies
 tightly organized=only members are allowed
to transact business there
 If private individuals or institutions want to
buy or sell securities, they have to instruct a
BROKER
 strong indirect influence on primary markets
 The two best-know stock exchanges
1) New York Stock Exchange (NYSE)
2) International Exchange in London
 Other important exchanges
1) American Stock Exchange (AMEX)
5
2) Alternative Investment Market (AIM)
 Veräußerungs-, Spekulationsgewinn; realisierter
Capital gain Kursgewinn, Wertzuwachs/ pridaná hodnota
 profits arising from the disposal (sale) of
capital assets such as property, shares and
bonds
 occur when an asset is sold at a price
exceeding its cost price purchase price (tritt ein,
wenn ein Vermögenswert zu einem Preis verkauft wird, der den
5 Kaufpreis des Kaufpreises übersteigt)
 If the selling price is lower--> capital loss
Spekulation
Speculation  an operator tries to exploit short-term price
fluctuations, by buying low and selling high
 commodities, securities, currencies, works of
art, jewels, …
 concentrates on quick capital gains
 has to assume risks
5  if his forecast of price movements turns out to
be wrong --> capital loss
Börsenindizes/ Akciové indexy, burza cenných papierov
Stock exchange indices
 people interested in general trends- measured by
index figures:
 Narrow-based:
1. Financial Times Stock Exchange 100 index
2. Dow Jones Industrial Average (comprises the
common stocks of 30 leading US corporations)
 Broad-based:
1. Standard & Poor’s index (includes 500 widely
held common stocks)
 Sectoral indices:
1. FT Gold index
 unweighted averages, measuring price movements
and investment performance
Investment bank:
1. Give investors information about the performance
of particular shares they hold
5 2. measure average stock price movements in points
 Geschäftsbank, Kommerzbank/ komerčná banka
Commercial bank  TRADITIONALLY, commercial banks made their
profit mainly from the difference in the
Full-service banks
interest they offered to lenders and charged to
borrowers
 non-governmental banking institutions
 purpose was to finance production and
distribution of goods by lending short-term
funds, to accept current account deposits and
to offer cheque-drawing facilities
known as retail banks
o OWNED by SHAREHOLDERS
o aim to attract savings from customers which are
then lent out to other customers or invested
6 o specialize in providing banking service to
individuals
Mengen-und Kleinkundengeschäft der Banken/ služby, bankové
Retail banking ponúkané širokej verejnosti
 standardised banking services
 personal loans, small-scale savings & checking
accounts and funds transfers
 offered mainly to:
o private customers, but also
o to small business enterprises, through
the branch networks of commercial
banks

6
Großkundengeschäft/poskytovanie bankových služieb zákazníkom
wholesale banking so silným finančným zázemím
 interbank transactions and financial
transactions between:
o banks and governments
o banks and large companies

6
 Kredit- bzw. Aktivgeschäft der Banken/ Poskytovanie úverov
Bank lending bankami
 According to maturity (short-term, medium term,
long-term finance)
 According to the purpose for which the funds lent
are used
 According to the security provided by the
borrower
 Short-term finance:
 duration of up to 1 year
 includes overdrafts (Kontoüberziehung)
 discount loans
 acceptance credits
 ordinary short-term loans
 Medium-term finance:
 ordinary loans, which have a duration between
1 and 5 years
 possible to extend revolving credits beyond
the usual 1-year period
 Long-term finance
 Loans with maturity up to 5 years
o Loans and other forms of bank lending may be
either unsecured or secured
o Security can take the form of some property or a
charge upon it (mortgage) or it may be provided by
6 means of a guarantee
Girokonto, Kontokorrentkonto/ bežný účet
Current account/ 

bank demand deposit account
withdrawing can be made:
cheque account o in CASH over the counter or
o through ATM an automated teller
machine
 account holder/owner is:
1. provided with a personalized cheque
book (name and account number
usually issued with a cheque card)
2. entitled to a number of banking
services (credit transfers, standing
orders, telephone, online banking,
direct debits, overdraft facilities)
6
 Dauerauftrag/ stála objednávka
Standing order  making regular payments to a person
 NOT AS EASY as direct debiting
 written instruction given by a customer to his
bank to pay a stated sum of money from his
CURRENT ACCOUNT to a named party (payee)
at regular intervals, until further notice or
until the date indicated
 payment of regularly fixed amounts:
o instalments
o rents
o insurance premiums
o subscriptions
 The customer has to specify:
1. the payee’s name
2. the amount to be paid at agreed
intervals
3. the duration of the order
EXAMPLE: If you would like to pay a set amount each
6 month into a savings account

Lastschrift-Einzugsverkehr, Abbuchungsverfahren/
Direct debiting bezhotovostné platenie
 Is EASY
 more FLEXIBLE than a standing order
 to allow the provider to take amount owned
each month from my CURRENT ACCOUNT
 to give the company permission to take the
money from your bank account whenewer
a payment is due
 method for paying varying amounts at
irregular intervals
 the payee gives instructions to the bank for
payment
 examples: phone bills, subscriptions,
membership
 the debtor signs a general authority entitling
6 his creditor to claim the amounts due from
the debtor’s bank
 Example: a supplier or goods/services sends the buyer an
invoice in the ordinary way and after a few days, submits
through his own bank a direct debit form for the invoice
amount to the buyer’s bank; the latter then debits the
buyer’s account with the amount in question, transferring it
to the supplier’s bank for the credit of his account.
 Kontoauszug/ výpis z bankového účtu
Bank statement  Printed loose-leaf summary of all
transactions from customer’s account within
a certain period of time
 The details of payments:
o date of payment
o the amount paid or received
o the value date
o method of payment
 Statements are supplied to customers
regularly or whenever a payment has been
made to the account in question
6
Bankgebühren, Kontoführungs-und Manipulationsgebühren/
Bank charges bankový poplatok
 bank customers have to pay an account
charge for the conduct of a CURRENT
ACCOUNT
 charge is based on the number of
transactions
 usually collected at the end of each charging
period: charges for specific services
stopping a cheque may have to be paid:
6 o when they arise
o at the end of each charging period

(Bank-) Einlagen/ peňažné prostriedky na bežných alebo

Bank deposits depozitných účtoch
 amount credited to a deposit account held by a
customer with a particular bank
 These credits may be from cash, cheques, drafts
or of transfers to the customer’s account
 Demand deposit (current account deposit) = may be
withdrawn by the customer or transferred by him to
someone else’s account at any time, without prior
notice to the bank; usually bear little or no interest
 Time deposit:
 fixed deposit: based on a contract that the depositor
may not make any withdrawal prior to maturity
 notice deposit: prior to the expiry of the agreed
period of notice
 US:
o 30 days and more cannot be withdrawn by
cheque
6 o cannot be transferred to other accounts
 Anzahlung ohne Kündigungsfrist, sofort fällige Anzahlung
Demand deposit/ Vklad bez výpovednej lehoty, ihneď vyplatiteľný vklad
 may be withdrawn by the customer
current account deposit/  or transferred by him to someone else’s account
at any time, without prior notice to the bank
sight deposits  bear little or no interest
6
Anzahlung mit Kündigungsfrist/ Vlkad s výpovednou
Time deposit lehotou, termínový vklad
 fixed deposit: based on a contract that the
depositor may not make any withdrawal prior to
maturity
 notice deposit: prior to the expiry of the agreed
period of notice
 US:
o 30 days and more cannot be withdrawn by
6 cheque
 cannot be transferred

Sparkonto/ sporiteľský účet

Savings account/ 

interest-bearing time deposits
wide range of investment products offered
by COMMERCIAL BANK and thrift institutions
Deposit account  high degree of flexibility: with instant access
to the account balance
 interest at a lower rate
 savers are issued with special cards: to
withdraw and even deposits at ATMs
 😊VERY SAFE form of investment because in
many countries they are covered by
government insurance schemes
 holders are typically risk-averse, low-to-
medium-income earners, who use their
savings accounts to accumulate funds (etwas
Kapital ansammeln, anhäufen)
Compounding interest

6
 Handelsbank in UK/ obchodná banka v UK
Merchant bank  do not provide regular banking services
 INTERNATONAL transactions
 specialize in advising large companies on
raising money and are involved in issuing
shares for them (are acting as an issuing
house)
 Acceptance of bills of exchange: in
connection with foreign trade
 Export and project finance where long-term
credit is required
 Foreign exchange dealing & advisory services
 Investment management on behalf of private
and institutional clients
 Domestic and international securities
underwriting and trading services
 Advice on:
o Mergers
o Acquisitions
o Venture capital investment
6  Issuing houses may take equity positions in
commercial and industrial companies
Investmentbank, Effektenbank/ investičná banka
Investment bank  act as intermediaries between:
1. companies and government
institutions wishing to raise capital
2. individual and institutional investors
 mainly engaged in marketing bond and other
securities issues (underwriting), syndicating
international loans, selling and buying
securities on the open market, and providing
investment advice
 assistance with mergers and acquisitions
6

Building society- UK
savings and loan associations- US
6 supplemented with a government bonus
Electronic banking/
e-banking
6  customers receive plastic cards or personal
Electronic funds
transfer/ EFT
6 payment service, reduction in paperwork
Bausparkasse/ stavebné sporenie
 loans to people to buy houses
 specialised financial institutions
 owned by their savers & borrowers
 Finance provided mainly in form of long-term
home loans, secured by mortgages
differences between Austrian “Bausparkassen” and
British “building societies” are:
- “Bausparkassen” have not been converted into
universal banks
- In Austria a member must have saved a specified
amount with his society before he can get a loan
- Interests paid on “Bausparkassen” deposits are
- British “building societies” play a much more
important role than Austrian “Bausparkassen”
elektronische Zahlungsverkehrs- und
Informationsleistungen
 “self-service banking”
 Available 24/7
 Involves the use of computers and
telecommunications technology in performing
banking services, with a view to eliminating
paper-based records and offering costumers
direct access
 acess to bank payment and information systems
 elements: electronic funds transfer, home
banking facilities and corporate cash
management service
codes, which permit them to access the system
involved
elektronischer Zahlungsverkehr/ elektronický prevod
finančných prostriedkov
 covers any transmission of funds through a
customer-or teller-operated terminal: an
ATM or a POS terminal, a telephone,
computer or similar instrument
 Messages originated by these devices
instruct a financial institution to debit or
credit an account, or cause such entries to be
made automatically
 a fast, paperless type of payment service,
which has to be distinguished from transfers
based on cheques, bank drafts, credit transfer
forms, or similar paper instruments.
 Advantages: fast and paperless type of
 Zentralbank, Notenbank/ ústredná banka
Central bank  Every country has a central bank
 Institution with wide range of powers to look
after its MONETARY system
1. responsible for adequate supply of legal tender
(sole note-issuing bank in a particular country)
2. it is the bankers’ bank: it performs certain tasks
for commercial and specialized banks.
Commercial banks keep accounts with the
central bank. They borrow directly or indirectly
from the central bank: Central bank acts as a
LENDER OF LAST RESORT
Charged with supervising and regulating the
banking system of the country in which it
operates
3. banker to its government: managing the
national debt, handling or superintending (etw.
überwachen, beaufsichtigen) the issue of government
stocks and Treasury bills, making short-term
6 advances to the government
Gesichertes Darlehen/ Zabezpečená pôžička

Secured loan  A lending product that is backed by collateral

(e.g., property or other assets) to reduce the
6 risk of the lender
gesetzliches Zahlungsmittel

Legal tender  Paper money and coins that have to be

accepted within a given jurisdiction (právomoc,
kompetencia) when used to meet a financial
obligation

6
Kreditgeber letzter Instanz/ Pôžička poslednej inštancie

Lender of last resort  The role played by an institution which lends

money to a borrower to whom no other
institution is prepared to lend

6
 Kreditkarte/ platobná karta
Credit card  issued by specialist credit card companies: VISA
card, MasterCard, American Express
 convenient alternative to cash
 card-issuing company grants a line of credit to
the cardholder
 Line of credit/Credit limit  the MAXIMUM
amount that he may have outstanding at any
one time without incurring a penalty (Strafe/pokuta)
 Every card bears:
1. the signature of its holder
2. his name
3. the card number
4. the expiry date
 The retailer checks whether the card is still valid,
swipes it through a special machine to obtain
online authorization for the transaction from the
card issuer, and then prints out a sales slip, which
the cardholder is asked to sign
You pay interest  The retailer sends the sales slip to the card-issuing
Like short-term loans institutions, which credits his account with the
 you are borrowing money from a bank to pay for amount claimed less a discount, and debits the
your purchase amount involved to the cardholder’s account.
 you have to pay later the money you “borrowed”  At the end of each month, the card issuer sends
a fully itemized statement to the cardholder
 If the holder ☹ fails to settle the monthly
account in full within the period specified by the
card issuer he is charged interest
 If the cardholder 😊 pays the whole amount
outstanding within a stipulated period after the
date of statementhe is not charged any
7 interest on the sum due, and therefore no extra
charges are incurred on the purchase made
“Kreditkarte” mit sofortiger Belastung des Kundenkontos/
Debit card dlžobná karta
 used by its holder to pay for goods or services
 any amount spent is immediately deducted
from the cardholder’s account (einen Betrag von
einem Konto abziehen) with the issuer bank= free
credit is eliminated
No interest
7
 Scheck/ šek, zloženka
Cheque  written order to a bank, given and signed by a person
who has a current account with that bank, to pay a
certain sum of money to a second, specified
person/organization or to bearer (Inhaber/nositeľ)
 it must be paid on demand – when it is presented for
payment
3 parties to a cheque:
1. Drawer: the person who makes out the cheque and
signs it. He can write cheques for any sum up to his
current account balance or overdraft limit.
2. Payee/bearer: the person to whom the cheque is
made payable
3. Drawee (bank): the bank on which the cheque is
drawn
classified into:
1) Order cheque:
o has the words: „pay...or order“
o if the payee named on the cheque wishes to give it
to someone else, he must transfer his rights to the
new recipient by ENDORSEMENT
o he endorses the cheque by signing it on the reverse
side
o now the person other than the original payee is
authorised to receive the sum
o is payable to a specified person
o TRANSFERRED BY ENDORSEMENT & DELIVERY

2) Bearer cheque:
o has the words: „Pay...or bearer“
o can be passed on to another person WITHOUT an
ENDORSEMENT because anyone who holds it is
authorized to receive the sum by cashing it or by
paying it into his account
o is payable to the bearer
o can be transferred by one person to another by
mere DELIVERY, WITHOUT any FORMALITY

3) Open/Uncrossed cheque:
o cheque which is not crossed
o ☹LESS SAFE
o payable in CASH but only at the bank on which it is
drawn. if it’s a bank other than the drawee bank,
then the holder (payee or drawer) has to have an
account with that bank
o it may be cashed at the drawee, where the sum will
be debited to the payer’s account
 4) Crossed cheque:
o has words: „A/C Payee“ (Account payee)
the cheque may only be credited to the
payee’s account
o 2 paralell lines on the face of the cheque
o cannot be cashed over the bank counter but
MUST be PAID INTO AN ACCOUNT !!!
o 😊SAFER
😊 to protect its owner against theft or loss
o if it is stolen or lost, the bank can trace the bank,
7 branch and account where the cheque is
presented
 If you want to redeem something but there is NOT
BOUNCE cheque/ stopped ENOUGH MONEY on an account
 If there are INSUFFICIENT or NO FUNDS in the
7 drawer’s account, the drawee bank refuses to pay
any cheques made out by him= it DISHONOURS (sheck
platzen lassen/zneuctiť) refuses to pay the amount shown
on it
Namensscheck, Orderscheck/ šek na poradie
Order cheque  cheque payable to a particular person or order
 transferable by ENDORSEMENT & DELIVERY
bank requires endorsement in the following cases:
1. Where the payee requests PAYMENT in CASH
over the counter => only possible if cheque is
OPEN/Uncrossed
2. Where the payee (indorsee) transfers the
cheque to another person (who then
becomes the indorsee)
 If the drawer of an order cheque wants to draw
cash from his account, he makes it payable to
7 himself by writing “Self” or “Cash” in the space
of the cheque form
Inhaberscheck/ šek na doručiteľa
Bearer cheque  cheque made payable to the bearer(Träger)
 WITHOUT ENDORSEMENT
 paid to anyone who presents it at the
drawee bank
☹ LESS SECURITY than an order cheque (may have
found or stolen, no legal right to it)
o has the words: „Pay...or bearer“
o can be passed on to another person WITHOUT
ENDORSEMENT  anyone who holds it is
authorized to receive the sum by cashing it or by
7 paying it into his account
o is payable to the bearer
o can be transferred by one person to another by
mere DELIVERY, WITHOUT any FORMALITY
 gekreuzter Scheck, Verrechnungsscheck
Crossed cheque  cannot be cashed over the bank counter but
MUST be PAID INTO AN ACCOUNT !!!
 The bank will collect the amount from the
bank on which it is drawn (drawee bank) and
credit this sum to its customer’s account
😊 to protect its owner against theft or loss
1. General:
o consists of 2 transverse paralell lines
across the face of the cheque, with or
without the words „and company“
o MAY be paid INTO AN ACCOUNT at any
bank
o the drawee bank will pay it to any bank

2. Special:
o consists of the name of a bank written
across the face of the cheque, with or
without transverse parallel lines
o MUST be paid INTO AN ACCOUNT at the
bank stated in the crossing
o the drawee bank will pay it only to that
bank
7

Scheckkarte/ šekový poukaz

Cheque card  GUARANTEES that any cheque made out by
the cardholder up to a specified amount will
be honoured by the bank issuing the card,
REGARDLESS of whether there are sufficient
funds in his account or not
 SAFEGUARD for traders and others accepting
cheques, because the risk is at the drawee
bank
 the person accepting a cheque has to make
certain that the drawer’s signature, his
account number and the cheque card
number conform and that the card is still
valid
 may also be used to draw cash at any branch
of the drawee bank
 banks also offer cheque cards which can also
7 be used as credit cards
 britische Geschäftsbank, Clearing-Bank
Clearing bank  include the big 6 banks in England
 full-service banks
 with their network and subsidiaries, they
dominate the BRITISH banking scene
 these institutions are members and co-owners of
the London Bankers Clearing House: organization
through which cheques and credit transfers
involving different members are cleared
 “Clearing” = process by which claims and
counter-claims arising from payment transactions
carried out by clearing banks are totaled and set
off against each other by a central institution
 For each pair of banks involved (A and B) only the
NET position is paid
7
Indossament, Bestätigung/ prevod rubopisom, poznámky
Endorsement/ na súdnom spise
 The act of assigning your rights as payee of

Indorsement 
negotiable instrument to another person
mainly used with the transfer of ORDER
CHEQUES!!!
 transferred by DELIVERY and INDORSEMENT
 the rights embodied in the instrument pass from
one person (transferor) to another (transferee)
 indorsement must be written on the reverse side
of the instrument to be transferred
 indorser: person who writes it
 indorsee: person to whom the instrument is
indorsed
 Blank indorsement: consists only of the
indorser’s signature, the instrument becomes a
bearer document and can be further transferred
by MERE DELIVERY (jednoduché doručenie)
 Special indorsement: consists of the indorser’s
signature and the name of the indorsee,
sometimes followed by the date “pay to John Brown.
July 18, 2006 – signed: Henry Smith”
 Restrictive indorsement: to prohibit further
transfer of the instrument “pay to John Brown ONLY”
 Any further transfer by the indorsee is possible
7 only by means of another indorsement
 Bankenscheck, Institutsscheck/ banková zmenka
Bank draft  negotiable instrument drawn by a bank either on
itself or on another bank at home or abroad
😊 VERY SAFE method of payment: used in
cases where ordinary cheques would not be
acceptable
 if a bank customer wishes to make a payment to
his foreign supplier, he may purchase (for a small
fee) a bank draft drawn by his bank on one in the
supplier’s country. He, or the bank itself, will
then forward it to the payee and at the same
time the bank will send to its foreign counterpart
(Gegenstück/náprotivok) a special letter of advice
Used mainly in INTERNATIONAL TRADE containing all details.
because it is safer than an ordinary cheque  This letter serves as 😊 PROTECTION against
FRAUD (Betrüger), since the draft is NOT PAID UNTIL
this communication has been RECEIVED by the
bank involved
7
Währung/ mena
Currency  money of a particular country or currency zone
e.g. dollar, euro, pound, yen etc.
 Convertible:
1. freely bought and sold in foreign exchange
markets
2. at the rates of exchange in effect at the time
of purchase or sale
3. the governments allow unregulated
purchases and sales
4. the amounts exchanged on foreign currency
markets are large
5. Examples: US dollar, euro, British pound etc.
 Non-convertible:
1. circulation is restricted by the local
monetary authorities
2. they are artificially pegged (künstlich fixiert)
3. usually more expensive on the official
market than on the black one
4. Examples: Algerian “dinar”; Vietnamese
“dong”
 The world’s major currency US DOLLAR,
followed by the euro, yen and pound

8
 Fremdwährung(en), Devisen/ kurz devíz, denný
Foreign exchange  synonym for foreign currency/currencies
 German terminology:
(forex or FX) o “Valuten”:
 foreign banknotes and coins
o “Devisen”:
 sight deposits (Sichteinlagen, pohľadávky)
denominated in a particular foreign
currency
 held by residents with non-resident
banks (e.g. Swiss “francs” deposited
by Austrian business firms with banks
in Switzerland)
o “Fremdwährung”:
 Foreign currency deposits
 held by domestic non-banks e.g.
manufacturing companies with
domestic banks

Devisenmarkt/ trhy zahraničných mien

Foreign exchange  Market in which convertible currencies can
be freely bought and sold (etw. am Devisenmark
market 
handeln)
Not a physical location but a vast worldwide
network of currency buyers and sellers linked
by computer, telephone etc.
 Exchange of information is rapid and
quotation of exchange rates on request, and
dealing at those rates
 usually transferred electronically from one
account to another

8
 Wechselkurs (Devisen-, Valutenkurs)/ výmenný kurz
Exchange rate  the price or value of one currency expressed
in terms of another: 1 pound = 1,45€
 can be fixed by:
1. the monetary authority (central bank) of
the country concerned (fixed, pegged,
official exchange rate)
2. by the free interplay of supply and
demand (market forces) in the foreign
exchange market (floating, flexible,
fluctuating exchange rate)
 different rates for different types of foreign
exchange rates: foreign coins, banknotes,
cheques, telex transfers
 “exchange rate”: inclusive term for all these
rates
 “Wechselkurs”: collective term for both
“Valutenkurs” and “Devisenkurs”

 Direct basis: the number of units of the home

currency per unit or 100 units of a particular
foreign currency: in Austria US$ 1 = €0.8353
 Indirect basis: price of one unit of home
currency in terms of a foreign currency: in
Austria €1 = US$ 1.2355

Wechselkurssysteme/ systém menových kurzov

Exchange rate  a set of RULES governing the external values of
currencies
systems/ regime  usually classified on the basis of the flexibility
that the monetary authorities concerned show
towards fluctuations in their countries’
exchange rates

8
 fester/fixer Wechselkurs/ pevný menový kurz
Fixed exchange rates  is NOT determined by the FREE INTERPLAY of
supply and demand in the foreign exchange
(pegged, official) exchange market
 set by the monetary authority, central bank of
rate the country concerned in agreement with the
IMF
 The value is called as parity or par value
The government manipulates the value of a country’s  determined by intervention in the foreign
currency exchange market (open market operations)
 Governments/central banks: intervene to
Rise/Increase => revaluation maintain the pegged rates (intervenieren, um die
fixierten Sätze beizubehalten)
Fall/Decrease => devaluation
 by entering the market to buy or sell the
currencies, preventing any fluctuations in the
rates concerned
Less risk  countries may impose controls (kann Kontrollen
auferlegen) on specific types of transactions,
typically on capital exports

 😊The major advantage: they promote

growth in international trade
 ☹ Disadvantage: requires the countries to
hold reserves of gold and foreign currencies in
order to be able to intervene in the market (auf
dem Markt einzugreifen, zasiahnuť na trhu)

8
 flexibler Wechselkurs/ kurz, premenlivý devízový
Floating rate of exchange  FREE INTERPLAY of supply and demand in the
foreign exchange market
(flexibe, fluctuating) rate  The main factors, which influence these two
variables are:
1. Exports and imports of goods and services
The value of a country’s currency changes based on 2. Unilateral transfers (Einseitige Überweisungen)
market forces 3. Exports and imports of capital (all long- and
short-term capital flows)

Rise/Increase => appreciation  😊Clean floating: determined by competitive

Fall/Decrease => depreciation market forces without any central bank
intervention (Eingriff, zasiahnutie)
 ☹Dirty/managed floating: FLEXIBLE exchange
rate system in which central banks intervene
in foreign exchange markets in order to
A greater risk  creates uncertainity & may influence exchange rates
discourage trade  major currencies whose values are determined
by dirty floating: US dollar, euro and yen
 most governments/central banks intervene in
the foreign exchange market:
 they influence supply and demand by selling
and buying the currencies concerned (open
market operations)
to keep their exchange rates at a target
level or to smooth fluctuations, without
being tied to any official rate
 If demand>supply: the price will be bid up (wird
erhöht) until these two market forces are in
equilibrium
 If supply>demand: same here until we are in
equilibrium
 Same with forex markets: the price of a currency is
allowed to adjust so as to adequate demand and
supply, an overall balance of payment-deficit or
surplus cannot occur
 😊 Advantage:
o act as automatic regulators of a country’s
balance of payments, restoring equilibrium
whenever it is disturbed
o no need for central banks to keep foreign
currency reserves to finance balance-of-
payments deficits
 ☹ Disadvantage:
8 o create uncertainty
may discourage trade and investment
 Abwertung (einer Währung)/ znehodnocovanie
Devaluation of a currency
Depreciation
Home currency ↓, exports of goods & services ↑, inward
foreign investment ↑, visible/invisible imports ↓
Es macht für Ausländer billiger diese Währung zu kaufen
und auch in sie zu investieren. Für Inländer wird es teurer
ausländische Währung zu kaufen.
+ reduces the balance of payment deficit
- inflation ↑
- pressure on further devaluations
8
 DEVALUATION: when a country with FIXED
exchange rates officially reduces the value of
its home currency in terms of other
currencies
 DEPRECIATION: system of FLOATING
exchange rates
 typical of countries with soft/weak
currencies, which result from serious
balance-of-payment difficulties
 A smaller amount of a foreign currency is
needed to buy the home currency
 A larger amount of the home currency is
needed to purchase the same amount of
foreign currency
 😊 major effects:
o it makes exports of goods and services
cheaper for foreign buyers
 more inflow of foreign capital
o it makes imports dearer (teurer) for domestic
buyers
 less outflow of capital
 method of reducing a country’s balance of
payments DEFICIT
 increase in import prices
 produces strong inflationary pressure,
imported inflation
 Complication: may be counter-productive:
leading to a higher deficit, in cases where
demand for exports and imports is relatively
inelastic
 may give rise to fears of further devaluations
and lead to a loss of confidence (môže spôsobiť
obavy z ďalších devalvácií a viesť k strate dôvery)
 Any plans to devalue are usually kept secret
and denied publicly to prevent speculative
pressure against the currency in question
 Aufwertung (einer Währung)
Revaluation of a currency
Appreciation / Upvaluation
Home currency ↑, exports of goods & services ↓, inward
foreign investment ↓, visible/invisible imports ↑
+ reduces the balance of payment surplus
8 speculative activity (bulls try to make a profit by
 REVALUATION: country with FIXED exchange
rates officially increases the value of its home
currency in terms of another
 APPRECIATION: system of FLOATING
exchange rates
 typical of countries with hard/strong
currencies
 A larger amount of a foreign currency is
needed to buy the home currency
 A smaller amount of the home currency is
needed to buy the same amount of foreign
currency
 😊 major effects:
1. it makes exports of goods/services more
expensive for foreign buyers
 less inflow of foreign capital
2. it makes imports cheaper for domestic
buyers
 more outflow of capital
 method of reducing a country’s balance-of-
payments SURPLUS
 Helps to bring inflation under control
 Because a revaluate may give rise to
first buying it and then selling it – after the expected
revaluation – at a more favourable exchange rate),
governments/central banks keep secret any
plans of revaluation (burzový špekulanti sa snažia
dosiahnuť zisk tým, že ju najskôr kúpia a potom ju predávajú - po
očakávanom precenení - pri priaznivejšom výmennom kurze)
 Devisenverkehrsbeschränkungen/ devízová kontrola
Exchange controls/ direct government RESTRICTIONS on the free
interplay of supply and demand in FOREX
foreign exchange controls/ markets- convertibility of currencies
 😊main purpose: to protect the external
currency controls value of the home currency
 if a country has a weak/soft currency and
suffers from a chronic shortage of foreign
exchange, its central bank may interfere in
the currency market to prevent the outflow
of foreign currencies, and therefore a further
depreciationof the local currency
 standard feature in many developing and
newly industrializing countries
 industrialized nations have either abolished
or relaxed them
The most important measures in this field:
1. Compulsory surrender of all foreign currency
earnings to the central bank
2. Allocation of scarce foreign exchange
reserves to organisations or individuals
(rationing)
3. Multiple exchange rates: to discourage
certain types of transactions, taxes on the
outflow of capital
(1. Povinné odovzdanie všetkých príjmov v cudzej mene do centrálnej banky
2. Prideľovanie vzácnych devízových rezerv organizáciám alebo jednotlivcom
3. Viacnásobné výmenné kurzy: odradiť niektoré druhy transakcií, dane z odlivu
kapitálu)
 Using exchange controls is one of the major
ways of influencing the external value of a
country’s currency
 others being open-market operations (buying
and selling of currencies by the central bank
8 involved)
 Wechselkursrisiko – allgemein/ riziko, výmenné
1
Exchange risk –  POSIBILLITY of LOSS or GAIN arising from a
change in a foreign currency rate
general  The 2 main types of exchange risk are:
1. Transaction risk: whenever individuals or
organisations are due to receive/make
payment in a foreign currency at some
future time. It relates to the possibility of
exchange gains/losses that may result
from the settlement of transactions
denominated in a foreign currency
2. Translation risk: the risk that a company's
equities, assets, liabilities or income will
change in value as a result of exchange
rate changes. This occurs when a firm
denominates a portion of its equities,
assets, liabilities or income in a foreign
currency
 Example exporter: Austrian exporter sells goods to a US importer,
the contract price of $10,000 being payable in three months;
Exchange rate on the date of contract US$ 1 = €1; If the dollar, for
instance, declines to $1 = €0.90 by the date of settlement, the
exporter is faced with an exchange loss (he only gets €9000 when
exchanging the invoice price) opposite happens if the euro rises in
value
 Example importer: if the value of the foreign currency in terms of the
importer’s home currency drops/rises between the contract and the
settlement date, he will make an exchange gain/loss, because he will
need a smaller/larger amount of his own currency to buy the foreign
8 currency amount needed to pay the invoice price.
Nicht konvertierbare Währung/ Nekonvertibilná mena
Non-convertible currency/  A currency that is NOT FREELY TRADED on the
foreign exchange markets
Inconvertible currency
8

 FLEXIBLE exchange rate system in which central

Dirty floating/ banks intervene in foreign exchange markets in
Managed floating order to influence exchange rates

8
 determined by competitive market forces
Clean floating without any central bank intervention

8
 Fremdwährung(en), Devisen/ výmena devíz
Foreign exchange  settling its transactions with other nations
 synonym for foreign currency

Forex  demand for foreign exchange:

o imports of goods/services
o unilateral transfers to foreign countries
o capital exports
 supply of foreign exchange:
o exports of goods/services
o unilateral transfers received from abroad
o capital imports
 If foreign exchange expenditures exceed foreign
exchange receipts, the country in question is said to
have a balance-of-payments deficit, which it may
finance from its foreign exchange reserves
accumulated in the past (Ak výdavky na výmenu cudzích mien
9 presahujú výnosy z príjmov z cudzích mien, príslušná krajina má deficit
platobnej bilancie, ktorý môže financovať z devízových rezerv
nahromadených v minulosti)
Zahlungsbilanz/ bilancia platieb
Balance of payments

 record of all economic transactions between its

residents (both natural persons and legal entities)
and the rest of the world, within a given period, 1y.
traditionally divided into 3 accounts:
1. Current account (Girokonto, Bežný účet)
o Visible account/balance of trade (Handelsbilanz)
(exports + imports of goods)
o invisible account (exports + imports of services,
investment income)
o unilateral transfers (einseitige Überweisungen)
2. Capital account (Kapitalkonto)
o exports + imports of capital
o in the form of direct and portfolio investments
 Account dealing with
 official transactions in gold
 foreign exchange
 If a country’s foreign exchange receipts fall short of
its payments  a balance of payments deficit
 To solve this deficit:
o the country may run down its official gold and
foreign currency reserves
o increase its foreign borrowing
o drawn on credit facilities made available by
international financial institutions (IMF)
 Under the new system, the balance of payments is divided
into 4 main accounts:
1) Current account
2) Capital account (Bilanz der Vermögensübertragungen)
o difference: it no longer includes a country’s in and
outflows of direct and portfolio investments
o covers now certain capital transfers related to
migrants, inheritances, EU programmes, debt
forgiveness (migranti, dedičstvo, programy EÚ, odpustenie dlhov)
3) Financial account (Kapitalbilanz)
o covers in-and outflows of direct and portfolio
investments
4) International investment position
o records the level (not the flow) of external assets
and liabilities
A country should try to keep its balance of payments in
equilibrium:
1. In the long run: keep its exports of goods/services
equal to its imports
 😊long-term solution: to ensure that more
money flows in than out
2. In the short run: keep necessary foreign
currencies to finance any balance-of payments
deficit
 Such deficits can be met from the country’s gold
and foreign currency reserves (they are
exhaustible (pretože sú vyčerpateľné))
On the long run: raise export and reduce imports
Achievable by:
 Government-supported export promotion:
export credit guarantees
 Imposing import controls (import quotas/ tariffs)
 Devaluing the home currency (exports get
cheaper, imports get more expensive)
 Cutting outward and increasing inward
investment: raise domestic interest rate and
controls on capital outflows
a government faced with a deficit: would be ill-advised to
tackle it by singling out one particular item of the balance
of payments (bolo by neoprávnené riešenie problému oddelením jednej
konkrétnej položky platobnej bilancie)
government policy: should eliminate a deficit through
appropriate general economic measures, and not by
9 controlling individual balance-of-payments items
 Leistungsbilanz/ bežný účet
Current account/  Balance of payments on current account
Consist of:

Unilateral transfer 1. visible account/balance of trade: exports &

imports of goods
(old format) 2. unilateral transfers
3. invisible account: exports &imports of services
 current account ☹deficit= If a country’s
imports of goods/services, together with its
unilateral transfers to non-residents, exceed
its visible and invisible exports + all unilateral
transfers received
 current account 😊surplus= the opposite
 If a country’s balance of trade is in the red,
this does not necessarily imply a current
account deficitit may be more than offset
by an invisibles surplus (môže byť viac ako kompenzované
neviditeľným prebytkom)
Under the new balance-of-payments format (IMF) the
new current account consists of 4 separate sub-accounts:
1. Goods account (trade in goods)
2. Services account (trade in services)
3. Income account: investment income and
compensation of staff temporarily employed
abroad (Entschädigung von im Ausland vorübergehend
beschäftigten Mitarbeitern)
4. Current transfers account (current transfers)
central government transfers (payments to
9 and receipts from the EU) and other transfers
(gifts made to private individuals abroad)
 Handelsbilanz/ obchodná bilancia
Visible account/  Exports and imports of goods
 Include tangible items (materielle Gegenstände):
Balance of trade/ o Commodities (Rohstoffe)
o capital goods

Goods account o electricity

o “visible” exports/imports

o If a country’s imports of goods exceed its exports

o Imports of goods> exports of goods
o visible trade deficit
o the balance of trade is unfavourable/adverse/in
deficit/shows a deficit/in the red

o If a country’s exports of goods exceed its imports

o exports of goods> imports of goods
o visible trade surplus
o the balance of trade is favourable/in
surplus/shows a surplus/in the black

o If exports equal imports

o Export=import
o the trade account would be in balance/in
equilibrium

 others:
o merchandise surplus/deficit(Warenüberschuss/defizit)
o goods surplus\deficit
o surplus/deficit in merchandise

9
 Dienstleistungsbilanz/ bilancia služieb
Invisible account/ 1. records the country’s exports and imports of
services during a certain period of time-1
services account year=invisibles
2. Invisible trade comprises services as: air, rail and
(old format) road transport, shipping, banking, insurance,

Income account licensing, tourismlead to payments in the

form of charges, freight, fees, insurance
(new format) premiums, licence royalties, tourist
expenditures
 includes investment income (interest, dividends,
air, rail and road transport, shipping, banking, profits). This income is regarded as
insurance, licensing, tourism compensation for services rendered by capital
invested abroad (Entschädigung für Dienstleistungen, die mit im
Ausland angelegtem Kapital erbracht werden)

repatriated profits o the cross-border flow of compensation:

interest o is not a service in the traditional sense but is
dividends recorded in the invisible account
o to staff temporarily employed abroad
o salaries paid by companies based in the
reporting country to their expatriate
managers (im Ausland lebende Manager)

 Under the new system (IMF) the investment

income and the cross-border flow of
compensation are recorded in a separate
section of the new current account called
“income account”

 As with the balance of trade account a

surplus/deficit may also occur in the invisible
account:
o invisible trade surplus/deficit
o invisibles surplus/deficit
o surplus/deficit in (on) services- on
invisibles

 income on foreign investments: interest,

dividends, repatriated profits are recorded in the
INVISIBLE account or in the INCOME account
9
 Bilanz der Vermögensübertragungen/ účet čistého
Capital account majetku
 record a country’s exports and imports of capital
(old scheme) (long-term and short-term capital flows between
its residents and all non-residents) during a
certain period of time, usually 1 year
Migrant transfer  Capital exports  outward investments
Debt forgiveness  money that people in a country invest in
Eu transfer foreign countries
 Capital imports  inward investments
 money invested in a country by companies
and investors from foreign countries
 Long-term capital transactions:
o direct investments
o portfolio investments
 Short-term capital transactions:
o changes in bank deposits
o purchases/sales of short-term securities
o similar transactions (speculative or for
commercial purpose)
 ☹Capital outflows: negative impact on the
overall balance of payments (BOP)
 😊Capital inflows: positive impact on the
balance of payments (BOP)
 Under the new scheme:
 new capital account DOES NOT include inflows
and outflows of direct and portfolio
investments
 now recorded in the NEW FINANCIAL
ACCOUNT
 but DOES COVER some special capital transfers,
such as those related to migrants, inheritances
(Erbschaften), EU programmes and debt forgiveness

 REMEMBER: income on foreign investments:

interest, dividends, repatriated profits are
recorded in the INVISIBLE account (old scheme)
9 or in the INCOME account (new scheme)
 Kapitalbilanz/ finančná správa
Financial account  new IMF format
 records:
(new format, IMF scheme)
o inflows and outflows of direct and portfolio
investments
o e.g.: acquisition of foreign securities
9 o changes in international reserve assets such
as: gold and foreign exchange
Dienstkonto/ Účet služieb
Services account o The part of a country's balance of payments
(invisible account, income account) (IMF scheme) that is used to record its
exports and imports of INVISIBLES
9
Warendefizit / Nedostatok tovaru
Goods deficit/ o The excess of a country's imports of goods
merchandise deficit/ over its exports of goods
o Imports of goods > exports of goods
(visible) trade deficit/
trade gap
9
 Volkswirtschaftslehre/ náuka o národnom hospodárstve
1
Economics  tries to understand what makes an economy
tick (was jdn/etw. bewegt)
 involves indentifying, describing, quantifying
and correlating such economic phenomena
as production, saving, investment,
consumption, price level, (un)employment
 with a view to developing a coherent
picture of the economic system concerned
 necessary to set up hypotheses and test
them against facts
 Macroeconomic:
 deals with broad aggregates (GDP, price
level, overall demand)
 Microeconomics:
 deals with small economic units (firms,
households, individual industries or
markets)
 insights into the functioning of economic
systems
 economic theory to concrete economic
10 problems and uses as a basis for economic
policy-making
(volks-)wirtschaftliche Aspekte, Rentabilitätsfaktoren/
2
Economics hľadisko rentability
 more concrete economic aspects of some
activity or operation
 economics of advertising= denote the
economic aspects of this promotional
activity
 economics of cash discount= all those
considerations which govern the granting
of discounts for early payment

 Economics in the more concrete sense of

the word takes the PLURAL= ECONOMICS

 Economics denoting a social science takes

10 the SINGULAR= ECONOMIC
 (Volks-)Wirtschaft/ národné hospodárstvo
1
Economy  subsystem of the socio-political system
 comprises economic institutions
 firms, banks, railway companies
 economic activities
 production, purchase, sale, lending
 “economy” refers to the economic system of
a particular country
 main task: to satisfy human wants through
the efficient and equitable allocation of
scarce resources (die effiziente und gerechte Verteilung
knapper Ressourcen)
 Private self-interest and public interest may,
clash in many areas
 market may fail to prevent injustice
10  and a waste of resources
o cyclical (short-term) problems
o growth (long-term) problems
o structural problems
 Wirtschaftssektoren/ hospodársky sektor
Sectors of the economy  1 Primary sector: (buying raw materials)
o extractive industries (Rohstoffindustrie)
o mining, fishing, agriculture, forestry
o it is concerned with obtaining raw
materials
o in which less-developed countries
tend to have the largest percentage of
their workforce employed
 2 Secondary sector:
o converts raw materials into finished
or manufactured goods
o using semi-manufactured goods in the
process
 3 Tertiary sector: (selling finished goods)
o services industries, in which
production and consumption coincide
o intangible goods (immaterielle Güter)
o insurance, banks, hairdressers, fast-
food, tour operators
 4 NEW: Quaternary sector:
o high-level, knowledge-based services
o accounting, tax or management
consulting, designing
o in which companies invest to ensure
future expansion (information and
communication technology,
education, consulting, R&D)
 The relative importance of the 3 main sectors
varies from country to country
 developing nations: large primary sectors
 mature economies (US, Britain): large and
growing tertiary sector
 Public sector: central and local government,
state owned-enterprises, national insurance
and pension funds and the central bank
 Private sector: The sector of the economy in
which virtually all public limited companies
operate, private profit-making concerns
manufacturing companies, banks, insurance
companies
 Voluntary sector: originations such as
Greenpeace
 Fertigungsindustrie/ priemyselna výroba
1
Industry  „secondary“/ „manufacturing“industry:
sector of the economy which is made up of
manufacturing establishments (bestehend aus
Produktionsbetrieben, vynika z výrobných závodov)

10  refers not only to large but also to small and

medium-sized enterprises (SMEs)
Wirtschaftszweig, Branche/ hospodárske odvetvie
2
Industry  any branch of economic activity
 examples: agriculture, production of
10 chemicals or steel, services, private industry
Dienstleistungssektor/ sektor služieb
Service industries  include all business units and government
agencies that supply services direct to end-
users  private households, governments
and businesses
 NOT COVERED BY THIS DEFINITION: Services
provided by domestic servants, by employees
in manufacturing and primary industries
(accounting services) and by private
households themselves
 Service goods are intangible and cannot be
stored are labour-intensive and less
amenable to rationalization (Dienstleistungsgüter sind
immateriell und können nicht gelagert werden sind arbeitsintensiv
10 und weniger rationalisierbar)
 Bruttonational (-sozial) produkt/ hrubý národný produkt
Gross national product  the total value of all final goods and services
produced by a nation’s economy (citizens of a
GNP country) in a year
 “Gross”: before deduction of depreciation
charges (vor Abzug der Abschreibungskosten)
 “Final”: intermediate inputs are excluded (vylúčené
medziprodukty) – no double counting or duplication
 nominal GNP: GNP at current prices
 real GNP: GNP at constant prices
 The real GNP may be calculated by applying a
GNP deflator to nominal GNP –the deflator
corresponds to the rate of inflation for all final
goods and services
 per capita GNP: GNP per head- by dividing the
number of inhabitants in a country into its total
GNP international comparison
 the total income that is earned by a country’s
factors of production regardless of where the
assets are located
Example: Nike’s profits would now count for US not
10 China’s GNP since a US company actually owns the
assets
Bruttoinlandsprodukt/ hrubý domáci produkt
Gross domestic product  a geographical concept
 the total value of all final goods and services
GDP 
produced within a country in a given time period
includes all incomes generated by economic
agents operating with its residents, irrespective
of whether these incomes remain in the country
or flow abroad
 GDP growth rate: the percentage change in
a country’s GDP from one year to the next
 Example: dividends paid by an Austrian subsidiary of a
British group to its parent company in Britain would
be part of Austria’s GDP, but not of its GNP
 In contrast: incomes generated abroad but paid to
Austrian residents would not be part of GDP but GNP
 The total of all economic activity in a country,
regardless of who owns the productive
assets
 The physical location, where it actually takes
place
Example: Nike working in Chinas counts for China’s
GDP not US’s
REAL GDP  adjusted for price changes
10
 Arbeitslosigkeit/ nezamestnanosť
Unemployment/  Inability of people to find work
 number of unemployed people

Joblessness  the inability of people who are able and willing to

work to find employment at going wage rates (zu
laufenden Lohnsätzen, na úrovni mzdových sadzieb)
 only involuntary joblessness
 voluntary forms: housewives, rentiers (Pensionisten) are
excluded
 Friction= imperfections of the labour market such as
time lost between two jobs or lack of information
 Anything that speeds up the search process will
reduce frictional unemployment:
 jobcenters, employment agencies
 Frictional unemployment:
o shorter
o caused by people moving from one job to
another
 Seasonal unemployment:
o seasonal pattern of work typical for these
industries tourism, agriculture &
construction (Bauwerk), difficult to eliminate
 growth-gap unemployment:
o caused by a deficiency of demand (Mangel an
Nachfrage)
o discrepancy between supply of and demand
for labour
o may require unorthodox methods  shorter
working week, job-sharing, greater flexibility
in working hours
 Structural unemployment: (the whole industy died)
o Longer-term
o mismatch between the type and location of
jobs offered and the qualifications and
location of jobseekers
o remedies: retraining, increasing geographical
mobility, short-and medium term labour
market forecasts
 Technological unemployment:
o replacement of workers by labour-saving
machines, computers
o caused by an increase in the capital-labour
ratio
o shorter working week may be the only
solution
 Voluntary unemployment:
o workers refuse to accept jobs at going wages
 Cyclical unemployment:
10 o results from ups and downs which occur
regularly in an economy
 Arbeitslosenrate/ miera nezamestnanosti
Unemployment rate/  rate, calculated by dividing the number of
unemployed by the labour force as a whole
Jobless rate (employed + involuntarily unemployed) and
multiplying the result by one hundred
 number of unemployed as a percentage of all
labour resources available at given wage
Unemployed= a person must be out of a job, but actively rates
looking for work. They must have taken some action to find  rate is influenced by:
a job in the last 4 weeks 1. economic and institutional factors
school-leaving age, retirement age,
Unemployed . 100 corporate and government employment
Labour force policies
(employed + unemployed & looking for work) 2. definitions of employed and unemployed
 national jobless rates are often not
comparable internationally
 OECD (organizations for economic cooperation and
development) calculates standardized
unemployment rates for 16 countries using
data from labour force surveys to adjust the
national figures
10  LAGGING INDICATOR
Arbeitskräftevolumen (-potential)/ pracovná sila
Labour force  comprises the employed and the registered
involuntarily unemployed
 those at work and those seeking employment
but unable to find some at prevailing wage
Those who are employed & those who are rates (zu den vorherrschenden Lohnsätzen)
unemployed and looking for work  concept EXCLUDESchildren, students, old-
age pensioners and rentiers
 Over 16 y.o.
 EU countries:
 Not in the military
 Not institutionalized o only the registered unemployed are
 Have NOT chosen to opt out of the workforce regarded as involuntarily unemployed
o EXCLUDES those who are not registered
o INCLUDE those on the unemployment
register who would not accept a job even
if they were offered one
 The size of the labour force is also affected by
how the term employed people is defined:
o US: armed forces are NOT COVERED as
employed
o Germany: self-employed are NOT
INCLUDED
 the size of the labour force is determined by:
demographic factors (population, age structure,
10 immigration etc.) and level of wages
  Those economic activities that are not normally
Informal- recorded in national income statistics because
Parallel- they are not reported
Shadow- ECONOMY
Underground-
10
Konjunkturindikator
UK: Economic indicator  statistical series sensitive to changes in the
level of economic activity
US: Business indicator 
1.
classified into 3 types:
Leading indicators: (BEFORE)
 Give an idea about what to expect
o new orders for capital goods, which
“lead” turns in the trade cycle
o they change in advance of rises or falls
in economic activity
o play an important role in forecasting
o to predict economic ups and downs
o new orders for capital goods
o construction machinery and demand
for raw materials
2. Coincident indicators: (AT THE SAME TIME)
o change at the same time as the
economy
o industrial production
3. Lagging indicators: (AFTER)
 Forecasts future trends based on what
happened earlier
o move up or down after the economy
has altered its course
o unemployment
o start-ups
o A rising rate of unemployment usually
indicates that the economy has already
been slowing down for some time
o A regularly measured economic
11 variable that changes some time after
the economy has altered its course
 Bruttonational (-sozial) produkt/ hrubý národný
Gross national product produkt
 GNP is the total value of all final goods and services
GNP 
produced by a nation’s economy in a year
“Gross”: before deduction of depreciation charges
 “Final”: intermediate inputs are excluded – no double
counting or duplication
 nominal GNP: GNP at current prices
 real GNP: GNP at constant prices
 The real GNP may be calculated by applying a GNP
deflator to nominal GNP –the deflator corresponds to
the rate of inflation for all final goods and services
 per capita GNP: GNP per head by dividing the number
of inhabitants in a country into its total GNP
international comparison
 expenditure or flow-of-product method:
o personal consumption (non)durable consumer
goods/services
o gross private domestic investment
o government expenditure on goods/services
o net exports of (in)visible items
 income method: GNP can also be calculated by adding
up all types of income: wages, salaries, rents, profits
and depreciation
 output or origin method: by aggregating the values
added by the various industries which make up the
economy as a whole
☹Critics:
1) It fails to include the value added by non-market
activities the work of housewives and the
value of leisure (Wert der Freizeit)
2) It includes “regrettables”: expenditure intended
to remedy some evil which might never have
come into existence but for activities leading to
higher GNP antipollution expenditure
3) It ignores the unwanted by-products of the
economic process (“bads” or “negative
externalities”)  pollution
4) It does not allow for the wealth-creating effect
of consumer durables (Gebrauchsgüter), which are
treated as consumer expenditure and not as
investment
Remedy:
1) Different measures of national welfare have
11 been developed, the most important being
NNW (net national welfare)
 Inflation
Inflation  persistent rise in the prices of goods and services
over a period of time
 leads to a decline in the purchasing power of a given
nominal sum of money  depreciation in the
internal value of the currency
 measured by:
o price index covering goods and services purchased
by the final consumer
o GDP deflator, which is based on all goods and
services included in the country’s GDP
 “creeping”: If the index shows only a slight increase
on the previous period
 “runaway inflation”/ “hyperinflation”: imply much
higher rates

 Theory of inflation:
1. DEMAND-PULL inflation: Demand ↑, Prices ↑
 excess of demand over supply, demand>supply
2. COST-PUSH inflation: Cost ↑, Prices ↑
 increase in costs
 consistent rise in prices resulting from an
increase in the prices of firms’ inputs, taxes
3. DEMAND-SHIFT inflation: structural imbalances

 negative impacts on the economy as a whole:

1. people lose confidence in the currency, which may
trigger (etw. auslösen) a flight into tangible assets (gold,
real estate)
2. wage-price spiral: higher prices leading to higher
wage demands and higher wages may spark another
round of price increases
 governments and central banks seek to keep
inflation under control by counter-inflationary
(deflationary) policies:
1. cutting government expenditure (Senkung der
Staatsausgaben)
2. increasing taxes (Erhöhung der Steuern)
3. reducing money supply (Verringerung der Geldmenge)
4. raising interest rates (Erhöhung der Zinssätze)
5. freezing prices
6. revaluating local currency (Aufwertung der lokalen Währung)
 many of these policies produce negative side-
effects TRADE-OFFS: deflationary policies tend to
drive up unemployment (treibt Arbeitslosigkeit in die Höhe)
 Phillips curve: the higher the rate of inflation, the
lower the unemployment rate and vice versa
11  Indexation: attempts to eliminate its negative
consequences by linking all or some economic
variables to a price index
 nominell
Nominal  a monetary variable sales, wages
 indicating that a particular variable (e.g., GDP
growth or wages) has NOT been corrected for
price changes
 Example: the statement that sales have risen by 10% in
nominal terms does not reveal how much of this increase is
due to price changes and how much to changes in the
11 underlying physical quantities tons, pounds number of
units sold
Real/vecný
Real  a monetary variable  sales, income, wages,
interest, return
 has been corrected for price changes
 The purpose is to provide an estimate of the
11 underlying physical quantities  tons,
pounds
Auftragseingang/ súhrn došlých objednávok
Order intake/  total amount of orders received by an
enterprise during a specified period of time
new orders 

an important LEADING INDICATOR
a high rate of incoming orders points to an
increase in economic activity
 =flow concept
11
Konjunkturzyklus/ hospodársky cyklus
UK: Trade cycle  periodic fluctuations, WITHOUT any outside
intervention, natural phenomenon

US: Business cycle 1. Boom:

 fast economic growth,
 full employment,
Economic cycle  high demand,
 rising prices,
 more confidence in economy,
 investment high but beginning to be shortages of
supply
 High levels of inflation
 labour shortages
 CAPACITY CONSTRAINTS (Kapazitätsengpässe/kapacitné
obmedzenia)
every boom will peak out: the growth rate of real GDP will
begin to fall
2. Slowdown:
 Downsizing of economy,
 Demand falls,
 Stocks of unsold goods rise,
 Some firms will close,
 Unemployment rises
prolonged and severe recession is referred to as a
“depression”
 3. Slump/Recession:
 Heavy unemployment,
 Low levels of demand
 SPARE CAPACITY (ungenutzte Kapazität/zvyšná kapacita)
4. Recovery/revival:
 Economy picks up,
 Demand rises
 Firms begin to invest
the economy may bottom out (start rising again)
before the stage of recession is reached; if the
upward trend is strong enough this phase will
develop into a boom;
 Governments deploy counter-cyclical policies to
eliminate or at least mitigate the ups and downs as
far as possible
11  Cyclical behavior of economies involves great
hardship (unemployment) and a waste of resources
starker Rückgang, Konjunktureinbruch, starke Rezession
Slump/Recession Wirtschaftskrise/ pokles, náhly v ekonomickej aktivite
 sudden severe/prolonged fall (náhle závažné /
dlhotrvajúce)
 The term may be applied to practically any
economic variable: both share prices and
property values may experience a slump
 If used without any indication of the variable
involved, it refers to a sharp fall in economic
activity
 synonym for RECESSION

11
Inflation auf der Nachfrageseite/ Dopyt po inflácii
Demand-pull inflation  A rise in prices caused by an increase in
consumer spending and/or business
11 investment
 Demand>supply
Verbrauchervertrauensindex/ Index spotrebiteľskej dôvery
Consumer confidence  An indicator that estimates how optimistic 😊
or pessimistic ☹ individuals and households
😊☹ index are about the future of the economy, the job
market and their own financial situation
 LEADING INDICATOR
11
 Kapitalgüter/ Kapitálový tovar
Capital goods  Goods that will be used by a firm to produce
other goods, or services, in the medium to
long term (for accounting purposes, usually
for over one year)
 Demand for capital goods: LEADING
INDICATOR
11
Realeinkommen/ Reálny príjem
Real income  The level of earnings in a country, taking into
account changes in the price level
11
 An indicator that estimates the willingness of
Business confidence, firms to engage in capital investment and so
boost demand
Business climate indicator
Business sentiment
11
Kapazitätsauslastung/ Využitie kapacity
Capacity utilisation  The extent to which a firm (or the economy as
a whole) is making use of its existing
11
resources
 Wirtschaftspolitik/ hospodárska politika
Economic policy  all measures planned or taken by a government
to regulate the economic affairs and welfare of a
nation
 direct intervention: (in die Wirtschaft direkt eingreifen)
o price controls, subsidies, taxes
o short-term goals: price stability
 indirect intervention:
o changes in the legal framework antitrust
law, company law
o longer-term goals: economic growth
 following steps:
1. determining the goals
2. analyzing the present situation
3. selecting suitable instruments to attain the
goals
4. arranging for the selected instruments to be
applied
5. checking the results and taking corrective
action
 The traditional goals:
1. price stability (direct intervention)
2. economic growth (indirect intervention)
3. full employment
4. redistribution of income
5. equilibrium in the balance of payments
6. ever-increasing volume and variety of
goods/services
7. environmental protection
8. careful use of resources
9. improvement in the quality of life
 ☹ Problems:
o many of these goals are incompatible with
each other  trade-offs
o between price stability and full employment
o between environmental protection and
economic growth
 Economic policy may be classified in:
1. Fiscal policy: aggregate demand, influenced
by changes in the volume and pattern of
government revenue and expenditure
2. Monetary policy: controls money supply and
the level of interest rates
3. Incomes policy: various forms of income
generated by the economic system
4. Exchange rate policy: controls exchange rates
 5. Industrial policy: controls the pattern of
industry
6. Regional policy: controls the special
distribution of economic activity

 economies are amenable to outside intervention

12 and can be guided in the direction desired by
policy-makers
Fiskalpolitik, Budgetpolitik
Fiscal policy  government spending & taxation rates
 government policy concerned with raising
GOVERNMENT
revenue (Staatseinnahmen aufbringen) through taxation
and deciding on the level and pattern of
expenditure with a view to controlling aggregate
demand (befassen sich mit der Erhöhung der Einnahmen durch
Besteuerung und der Entscheidung über die Höhe und das Muster der
Ausgaben, um die Gesamtnachfrage zu kontrollieren)
 Examples:
1. Cutting taxes to stimulate economic
activity (Steuersenkungen zur Ankurbelung der
Wirtschaftstätigkeit, Zníženie daní na stimuláciu
ekonomickej aktivity)
2. increasing taxation to skim off excess
purchasing power and slow down
inflation (Erhöhung der Besteuerung, um übermäßige
Kaufkraft abzubauen und die Inflation zu verlangsamen,
Expansionary CONTRACTIONARY zvýšenie zdaňovania, aby sa znížila nadmerná kúpna sila a
 Increasing spending  Reducing spending spomalila inflácia)

 Reducing tax  Increasing tax 3. boosting government expenditure to

counter recessionary tendencies
(Erhöhung der Staatsausgaben, um den
Rezessionstendenzen entgegenzuwirken, posilnenie
vládnych výdavkov na boj proti recesívnym tendenciám)

12
 Budget, Haushaltsplan/ štátny rozpočet
Budget  refers to the government revenue and
expenditure for a fiscal year
(fiscal policy)
 surplus:
o expenditure<revenue
o present no problems
 deficit:
o expenditure>revenue
o have to be financed by borrowing money
domestically or abroad
o increase in deficit stimulatory/ reflationary
effect
o reduction in deficit  deflationary effect
 balanced:
o expenditure=revenue
 difficult since governments enjoy excellent credit
ratings and banks are only willing to lend to
them
 Changes in the budget balance:
o higher social security benefits or fiscal
rectitude (steuerliche Richtigkeit/ fiškálna správnosť)
o may be deliberately engineered to control
the level of economic activity (kann gezielt
entwickelt werden, um die wirtschaftliche Aktivität zu kontrollieren)
o deficit spending to stimulate the economy
and reduce unemployment
 Revenue can be raised by:
1. Privatization: selling state-owned assets
(Staatseigentum /predaj aktív vo vlastníctve štátu)
2. May derive from dividends paid by state-
owned enterprises (Môže pochádzať z dividend
vyplácaných štátnymi podnikmi)
 Budgets are not only used by governments: business firms,
private and public organisations have found them useful
management instruments in planning and controlling the
allocation of resources they draw-up budgets for capital
expenditure, sales or cash at the beginning of the business
period, and compare actual and budgeted performance at
the end

12
 Geld-und Kreditpolitik, Notenbankpolitik/ finančná politika
Monetary policy  Controlling the money supply & interest rates
 attempts to achieve the broad goals of economic
CENTRAL BANK policy (full employment) by controlling money
supply or interest rates
 Other tools include:
1. Open market operations
2. reserve requirementsspecial deposits
3. direct controls on the availability of credit 
implemented by a country’s central bank

A central bank pursuing a policy of “easy money”:

1. may lower interest rates
2. increase the money supply by open-market
operations
3. this encourages individuals and firms to
borrow more from banks
12 4. it may ease reserve requirements (making it
easier for banks to lend more)
5. relax direct controls on the availability of
credit

The opposite  “tight money”

 quantitative easing: when interest rates are

at minimum
 Nationalbank/ ústredná banka
Central bank  every country needs a central bank-
institution with a wide range of powers to
(monetary policy)
look after its monetary system
charged with the following functions:
1. responsible for an adequate supply of legal
tender (gesetzliches Zahlungsmittel) (banknotes
and coins that have to be accepted in
settlement of debts), the sole note-issuing
bank
2. It is the bankers’ bank it performs certain
tasks for commercial and specialized banks,
o Commercial banks keep accounts with
the central bank
o They borrow directly or indirectly from
the central bank
o frequently charged with supervising and
regulating the banking system of the
Can increase money supply by BUYING government country
bonds from the private sector. 3. banker to its government, managing the
By SELLING bonds to the private sector => would national debt, handling or superintending
decrease the amount of money in circulation because the issue of government stocks and Treasury
the funds used to buy the bonds would be taken away bills (Štátne pokladničné poukážky), making short-term
from potential consumers & investors advances to the government, providing
advice on financial matters
4. implementation of monetary policies
regulates the country’s money supply by
open-market operations, calling for special
deposits, influencing interest rates and
operating direct controls on bank lending
5. active on the external front intervenes in
12 the FOREX markets to control exchange rates
Geldmenge/ množstvo peňazí v ekonomike
Money supply  amount of money which exists in an
economy at any given time
(monetary policy)
 covers banknotes and coins in circulation
 In most countries interbank deposits  the
most important component of money supply,
12 accounting for around 70-80% of the total
 Zinsen/ úrok
1
Interest  price charged by a lender for the temporary
use of funds
 percentage per annum of the principal
 The rate set is determined by his
creditworthiness and such factors as credit
supply and demand, rate of inflation
 interest rate by the central bank
US: discount rate
UK: base rate
12 EU: official interest rate (Leitzinsen)

Offenmarkt-Operation/ trh, voľný

Open market operation  monetary policy
 buying and selling of government securities
(government bonds) by a country’s central
bank with a view to controlling money supply
or interest rates
 If the central bank wants to increase its
country’s money supply it will buy
government securities from the private sector
 A decrease by selling such securities to the
private sector
 Open-market operations are not restricted to
controlling money supply used to influence
12 supply of, and demand for, any commodity
and its price
(Außen-) Handelspolitik/ obchodná politika
Trade policy  all measures taken by a government
 to control exports and imports of goods and
services
 Governments tend to promote (in)visible
exports they provide foreign exchange
 to impose controls on imports

12
Preisstabilität/ Cenová stabilita
Price stability  0
 zero/low inflation
A key objective of economic policy which is usually
defined by a country's inflation target
12  direct intervention
 short term goal
 Industriepolitik

Industrial policy  concerned with encouraging particular activities

or sectors that are seen as useful or lucrative
 The government seeks to influence its industrial
structure (industrial mix), and is concerned with the
question of what types of industry are desirable and
what size they should be
 The instruments that might be used:
1. Selective investment incentives: investment
grants, first-year allowances, investment tax
credits
2. Outright subsidies
3. Favourable loans
4. Government procurement policies
12 5. Protective tariffs
Regionalpolitik
Regional policy  concerned with the territorial distribution of
economic activity
 aims at altering the spatial distribution or
regional pattern of economic activity (zielt darauf
ab, die räumliche Verteilung oder das regionale Muster der
Wirtschaftstätigkeit zu verändern)
 😊improving the economic situation in areas
of a country or other political unit (EU) that
suffer from low growth, low income levels,
and chronically high unemployment
 Typical regional development policies include:
1. Direct government grants to improve
infrastructure
12 2. Investment incentives to encourage firms
to move to areas concerned (Investitionsanreize,
um Unternehmen zu ermutigen, in die betroffenen Bereiche zu
ziehen)
3. Provision of low-cost loans
Einkommenspolitik/ politika, mzdová
Incomes policy 

Coltrolling wage growth
Restrain (potláča) prices, wages, salaries,
profits, dividends, or other forms of income
 either together or selectively
 with a view to slowing down inflation
 Such measures may be voluntary or statutory
the government may rely:
o on persuasion and exhortation or
o on mandatory controls
(o presvedčení a výzve alebo o povinných kontrolách)
Examples of incomes policies:
1. Wage and price controls/freezes
12 2. Voluntary wage and price guidelines
3. Agreements between government, business
and labour on wage and price restraints
 antizyklische Konjunkturpolitik
Counter-cyclical policy  to smooth out the regular fluctuations
occurring naturally in a country’s economy
 at eliminating and mitigating cyclical
fluctuations (Beseitigung, Milderung von zyklischen
Schwankungen/zamerané na odstránenie, zmiernenie cyklických
výkyvov)
 to cool down an overheated economy
 adopted by governments
 In a BOOM (economy is overheated) 
o deflation  appropriate policy
 In a RECESSION
o Reflation stimulatory measures
 ☹ main problems: how to time and
calibrate the measures correctly avoiding
negative side effects
12
Aufschwungsphase, expansive Konjunkturpolitik,
Reflation Konjunkturbelebungsmaßnahmen/ rozvojova faza
 emphasis on aggregate demand and the level

(stimulatory measures) of economic activity

 in periods of slow growth
 to describe:
1. the first phase in the recovery from a
Slump/Recession
2. the stimulatory measures taken by the
governments to achieve such a recovery
 To reflate the economy government adopt 
o fiscal policies:
 tax cuts
 increase in government expenditure
o monetary policies:
 lowering interest rates
 increasing money supply

Once the upswing has started

 the economy tends to grow, with extra spending
creating extra employment and income, which leads to
even more spending
 because each round of additional spending is matched
by a greater supply of goods/services
there is little/no rise in prices
 when all resources are fully utilized, no further
expansion of output will be possible
 if demand continues to rise, prices will go up

12
 restriktive Wirtschaftspolitik, Deflation
Deflation/  In a BOOM when economy is overheated
deflation will be the appropriate
Negative inflation countercyclical policy
 economic policy to reduce the level of overall
demand
 main purpose:
 to calm down an overheated economy
 slow down the rise in prices
 government deflate its country by adopting
monetary or fiscal policy
MONETARY: raising interest rates,
contracting (kürzen) money supply,
FISCAL: hiking (erhöhen) taxes, cutting
government expenditure
☹bad side effects:
 increase in the rate of unemployment
 fall in incomes
😊to avoid these: economists recommend
 incomes policies in order to get
inflation under control
12
Lenkungsmaßnahmen, Restriktionen, Bewirtschaftung/ riadiace
Controls prvky
 most direct form of government intervention
in the economy
 The government is not satisfied with the
results produced by the market and selects
one or more strategic variables and
determines their value by administrative
action (instead of leaving this to the free
interplay of supply and demand)
 Variables for regulation include:
1. Prices
2. Wages
3. Rents
4. interest rates
5. exchange rates
 controls are only temporary
 They are imposed or adopted when free
market results begin to diverge too much
from policy goals
 they may be tightened if they fail to produce
the desired results
 relaxed/loosened or abolished/lifted when
considered too harsh (považované za príliš kruté) or
12 unnecessary