Glossary

Full list | Multilingual glossary | xml145  words
  • Annual account
    Annual accounts present a view of a company's household, insofar as it can be expressed in terms of sums of money. All annual accounts are made up of four parts: the balance sheet, the income statement, the notes and the social balance sheet, which have their own entry in this glossary.
  • Arbitrage
    Action which consists in buying and selling or borrowing and lending simultaneously in order to take advantage of price or interest rate differentials. The effect of arbitrage is to equalise prices or interest rates.
  • Article IV consultation
    In order to monitor the macroeconomic and exchange rate policies of its member countries, the IMF holds annual bilateral consultations with individual countries on their national economic and monetary policy. The IMF then issues an opinion and may make recommendations concerning the country’s policy. However, the recommendations are not binding. Twice a year, the global economic situation is discussed in ‘The World Economic Outlook’.
  • Assignat
    Paper money backed by property confiscated from the clergy and the nobility, placed in circulation by France from 19 December 1789 to 19 February 1796.
  • Balance of payments
    A statistical instrument that summarises, for a specific time period, the economic transactions of an economy with the rest of the world. The transactions considered are those involving goods, services and income; those involving financial claims on, and liabilities to, the rest of the world; and those (such as debt forgiveness) that are classified as transfers.
  • Balance sheet (Annual account)
    The balance sheet describes the company's assets at the end of the fiscal year. On the one hand you will find the property or the "assets" of a company. The latter for instance encompass the buildings, the vehicles, the stocks (raw materials and auxiliary materials, commodities), claims on customers, liquidities, etc. On the other hand there are the sources of finance or the "liabilities" of the company. Liabilities for instance refer to the capital contributed by the shareholders, the debts to credit institutions, suppliers, provisions built up in view of the anticipated expenses.
  • Bank for International Settlements (BIS)
    International financial institution whose primary aim is to promote cooperation between the central banks of the industrial countries. The BIS acts as the ‘bank of central banks’.
  • Banking union
    The banking union is an EU-level banking supervision and resolution system which operates on the basis of EU-wide rules. It is comprised of 3 main building blocks: (1) The single rulebook, (2) The single supervisory mechanism, (3) The single resolution mechanism. It aims to ensure that the banking sector in the euro area and the wider EU is safe and reliable and that non-viable banks are resolved without recourse to taxpayers' money and with minimal impact on the real economy.
  • Basle Committee on Banking Supervision
    The Basle Committee on Banking Supervision was set up in 1974 by the governors of the G10. It deals with questions concerning banking supervision, and in particular the capital requirements imposed on credit institutions.
  • Bearer Security
    A paper stock or bond. The owner is the person that has the security in his possession and the transfer of ownership takes place by simply handing over the security.
  • Belgian Treasury Bills, BTB
    Short-term dematerialised loans in euro or in foreign currency issued by the Belgian Treasury. They are related to the euro-denominated treasury certificates, but, unlike them, they can be issued continuously.
  • Benchmark
    In relation to investments, a benchmark is a reference portfolio or index constructed on the basis of the objectives for the liquidity and risk of, as well as the return on, the investments. The benchmark serves as a basis for comparison of the performance of the actual portfolio.
  • Bill of exchange
    The bill of exchange is a negotiable security signed and dated by its issuer (the drawer). It contains an unconditional order or instruction for the debtor (the drawee) to pay a fixed sum of money to a certain person or to their order upon maturity. If the debtor agrees to this, he accepts the bill of exchange by signing it. Its form, content and legal consequences are governed by law.
  • Bimetallism
    This monetary system based on the two metal standards, gold and silver, was in almost universal use until the mid 19th century. The discovery of substantial gold mines (California in 1848, Australia in 1851) and silver mines (in Nevada) caused excessive fluctuations in the value of these two metals. That disrupted the operation of the system, which was gradually abandoned.
  • Bond market
    The market on which medium and long-term debt securities, i.e. debt securities with an original maturity of more than one year, are issued and traded.
  • Bretton Woods
    In 1944, at the American holiday resort of Bretton Woods, in New Hampshire, the foundations were laid for an international monetary system. During World War II, the allies’ financial experts met there to prepare for peacetime financial conditions. The new system was intended to prevent the mismanagement of currencies, to devise a less rigid system than the gold standard, and to stabilise exchange rates. The new system was no longer based exclusively on gold, but on gold plus the US dollar. The system survived until the early 1970s when President Nixon decided to let the dollar float. The International Monetary Fund and the World Bank are two institutions which were created at the Bretton Woods conference.
  • Chained euros
    Means to measure the volume growth and to remove the effect of price changes in the calculation of various economic aggregates (such as GDP, investment, household consumption...).
  • Compulsory tender
    Compulsory tender corresponds to the principle adopted by all central banks whereby they abolished the obligation to convert banknotes into gold. That principle, which seems natural enough today, was not always readily accepted by our forebears.
  • Constituency
    The International Monetary Fund is managed by a Managing Director and 24 Executive Directors. The latter represent one country or a constituency of several IMF member countries.
  • Consumer confidence
    The consumer confidence index is a concept which is used to try to predict private consumption on the basis of surveys. The questions in the European Commission survey are divided into five categories: (1) the financial situation of households; (2) the outlook for the financial situation of households; (3) the current general economic situation; (4) the outlook for the general economic situation; (5) the desirability of purchasing durable goods. The questions relate to a one-year period.
  • Consumer credit
    Consumer credit refers to a loan contracted by a natural person for private purposes and used for purchasing something other than real estate. It usually takes the form of an overdraft facility or credit line, instalment credit or hire-purchase.
  • Corporate governance
    Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation and lays down the rules and procedures for decision-making.
  • Council of Ministers
    An institution of the European Community made up of representatives of the governments of the Member States. The Council meeting in the composition of the ministers of economy and finance is often referred to as the ECOFIN Council.
  • Counterparty
    The opposite party in a financial transaction (e.g. any party transacting with a central bank).
  • Credit allotment
    Procedure whereby the Eurosystem arranges for credit institutions in the euro area to compete (by tendering) to obtain liquidities.
  • Credit institution
    An undertaking whose business is to receive deposits and other repayable funds from the public and to grant credit for its own account. Banks and savings banks are credit institutions.
  • Credit risk
    The risk that a counterparty will not settle an obligation in full, either when due or at any time thereafter.
  • Debt securities
    Debt securities represent a promise on the part of the issuer (i.e. the borrower) to make one or more payment(s) to the holder (the lender) at a specified future date or dates.
  • Deflation
    General and persistent decline in prices
  • Delors Report
    The Delors Report, presented in April 1989 by a group of experts comprising the governors of the national central banks, laid the foundations for the euro and defined the transition to EMU as a three-stage process. The provisions of the Maastricht Treaty are largely based on the ideas set out in that report.
  • Deposit and Consignment Office
    A government body, which is part of the Belgian Federal Public Service Finance. The Office receives and administers all deposits, security deposits and consignments that are imposed pursuant to judicial or administrative decisions or as a consequence of laws and regulations.
  • Deposit facility
    A standing facility of the Eurosystem which counterparties may use to make overnight deposits, remunerated at a pre-specified interest rate, at a national central bank.
  • Direct investment
    Cross-border investment that reflects the objective of obtaining a lasting interest in an entreprise resident in another economy.
  • Draw
    Drawing the numbers of a lottery loan for redemption. See lottery loan.
  • Drawing for redemption
    Drawing the numbers of a lottery loan for redemption. See lottery loan.
  • EONIA (Euro overnight index average)
    A measure of the effective interest rate prevailing in the euro interbank overnight market. It is calculated as a weighted average of the interest rates on unsecured overnight lending transactions denominated in euro, as reported by a panel of contributing banks.
  • ERM II (exchange rate mechanism II)
    The exchange rate arrangement which provides the framework for exchange rate policy cooperation between the euro area countries and the EU Member States not participating in Stage Three of EMU.
  • Economic analysis
    One pillar of the ECB’s framework for conducting a comprehensive analysis of the risks to price stability, which forms the basis for the Governing Council’s monetary policy decisions. The economic analysis focuses mainly on the assessment of current economic and financial developments and the implied short to medium-term risks to price stability from the perspective of the interplay between supply and demand in goods, services and factor markets at those horizons. In this respect, due attention is paid to the need to identify the nature of shocks affecting the economy, their effects on cost and pricing behaviour and the short to medium-term prospects for their propagation in the economy (see also monetary analysis).
  • Economic and Financial Committee (EFC)
    This committee consists of the Treasury directors, the persons who are second in command of the national central banks of the European Union, two representatives from the European Central Bank and two from the European Commission (34 members altogether). It is responsible for preparing the meetings of the EU Finance Ministers and those of the Eurogroup.
  • Economic and Monetary Union (EMU)
    The Maastricht Treaty describes the process of achieving EMU in the European Union (EU) in three stages. Stage One of EMU started in July 1990 and ended on 31 December 1993; it was mainly characterised by the dismantling of all internal barriers to the free movement of capital within the EU. Stage Two of EMU began on 1 January 1994. It provided for, inter alia, the establishment of the European Monetary Institute (EMI), the prohibition of financing of the public sector by the central banks, the prohibition of privileged access to financial institutions by the public sector and the avoidance of excessive government deficits. Stage Three started on 1 January 1999 with the transfer of monetary competence to the ECB and the introduction of the euro. The cash changeover on 1 January 2002 completed the process setting up EMU.
  • Economic situation
    The position of the economy in the economic cycle, which is characterised by phases of expansion and recession in activity, varying in duration and intensity.
  • Electronic money (e-money)
    An electronic store of monetary value on a technical device that may be widely used as a prepaid bearer instrument for making payments to undertakings other than the issuer, without necessarily involving bank accounts in the transactions.
  • Equity market
    The market in which claims to a share in the ownership of a business are issued and traded. A major difference between equity and debt is that the former does not have to be repaid by the issuer.
  • Euribor (Euro Denominated Interbank Offered Rate)
    The rate at which a prime bank is willing to lend funds in euro to another prime bank. The EURIBOR is calculated daily for interbank deposits with a maturity of one week and one to 12 months as the average of the daily offer rates of a representative panel of prime banks, rounded to three decimal places.
  • Euro
    The name of the European single currency adopted by the European Council at its meeting in Madrid on 15 and 16 December 1995.
  • Euro area
    The area encompassing those Member States in which the euro has been adopted as the single currency in accordance with the Maastricht Treaty and in which a single monetary policy is conducted under the responsibility of the Governing Council of the ECB. In 2015 the euro area comprises Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
  • Euroclear
    A securities depository undertaking responsible for exchanging and completing transactions concerning international securities and cross-border transactions concerning national securities.
  • Eurogroup
    Informal grouping bringing together those members of the ECOFIN Council who represent the euro area countries. It meets on a regular basis (usually prior to meetings of the ECOFIN Council) to discuss issues connected with the euro area countries’ shared responsibilities for the single currency. The European Commission and, when appropriate, the ECB are invited to take part in these meetings.
  • European Central Bank (ECB)
    The ECB lies at the centre of the European System of Central Banks (ESCB) and the Eurosystem and has legal personality under Community law. It ensures that the tasks conferred upon the Eurosystem and the ESCB are implemented either through its own activities or through those of the national central banks, pursuant to the Statute of the European System of Central Banks and of the European Central Bank. The ECB is governed by the Governing Council and the Executive Board, and, as a third decision-making body, by the General Council.
  • European Commission
    The institution of the European Community which ensures the application of the provisions of the Maastricht Treaty. The Commission develops Community policies, proposes Community legislation and exercises powers in specific areas. In the area of economic policy, the Commission recommends broad economic policy guidelines (BEPGs) and reports to the Council on economic developments and policies. It monitors public finances within the framework of multilateral surveillance and submits reports to the Council.
  • European Council
    Provides the European Union with the necessary impetus for its development and defines the general political guidelines thereof. It brings together the Heads of State or Government of the Member States and the President of the European Commission.
  • European Currency Snake
    On 24 April 1972, Belgium, France, Germany, Italy, Luxembourg and the Netherlands decided that, in future, the exchange rates of their currencies must not diverge from one another by more than 2.25%. This system was known as the “snake”.
  • European Monetary Institute
    A temporary institution set up at the start of stage II of Economic and Monetary Union on 1 January 1994. The EMI was dissolved in 1998 when the European Central Bank (ECB) was established.
  • European Monetary System
    The countries of the European Community formed the European Monetary System (EMS) between March 1979 and January 1999. The EMS exchange rate mechanism was based on a system of agreed central exchange rates between the member currencies. In accordance with the Maastricht Treaty, the EMS was converted to Economic and Monetary Union (EMU) in 1999.
  • European System of Central Banks (ESCB)
    Composed of the European Central Bank (ECB) and the national central banks (NCBs) of all EU Member States, i.e. it includes, in addition to the members of the Eurosystem, the NCBs of those Member States that have not yet adopted the euro. The ESCB is governed by the Governing Council and the Executive Board of the ECB, and, as a third decision-making body of the ECB, by the General Council.
  • European System of Financial Supervision (ESFS)
    The European System of Financial Supervision’s purpose is to ensure supervision of the European Union’s financial system. Besides the European Systemic Risk Board (ESRB), the ESFS comprises the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), the European Securities and Markets Authority (ESMA), the Joint Committee of the European Supervisory Authorities (ESAs) and the competent or supervisory authorities in the Member States.
  • Eurosystem
    Comprises the ECB and the national central banks (NCBs) of those Member States that have adopted the euro in Stage Three of Economic and Monetary Union (see also euro area). The Eurosystem is governed by the Governing Council and the Executive Board of the ECB.
  • Executive Board (ECB)
    One of the decision-making bodies of the ECB. It comprises the President and the Vice-President of the ECB and four other members appointed by common accord by the Heads of State or Government of the countries that have adopted the euro.
  • Fiduciary money
    All the banknotes and coins issued by the national central bank and held by economic agents.
  • Financial Stability Forum
    The Financial Stability Forum was set up in April 1999 to strengthen international cooperation and coordination in the supervision of financial markets. The forum has 42 members: apart from the chairman, who is appointed personally, three representatives of each G7 country (the Ministry of Finance, the central bank and the principal supervisory authority), one representative of the central banks of Australia, the Netherlands, Hong Kong and Singapore, two representatives from the IMF and two from the World Bank, one representative from the OECD and one from the BIS, there are two representatives from each of the following institutions: the Basle Committee on Banking Supervision, the International Organisation of Securities Commissions (IOSCO), the International Association of Insurance Supervisors (IAIS) and one representative from each of the two central bank committees of experts, namely the Committee on the Global Financial System (CGFS) and the Committee on Payment and Settlement Systems.
  • Financial accounts
    Accounts describing the financial assets (at a given moment) and financial transactions (during a given period) of the main sectors of the national economy (financial institutions, non-financial corporations, households and general government) by category of instrument (fiduciary money, deposits, securities, credit, etc.).
  • Financial institution
    Undertaking whose main function consists in entering into financial commitments (collecting deposits, issuing bonds, etc.) and acquiring financial assets (granting credits, buying securities, etc.) or pursuing ancillary financial activities. Credit institutions, insurance companies, pension funds and investment enterprises are financial institutions.
  • Fine-tuning operation
    A non-regular open market operation executed on a non regular basis and mainly in order to stabilise very-short-term money market interest rates in cases of unexpected liquidity fluctuations (e.g. strong demand for banknotes tending to reduce the deposits of credit institutions with the Eurosystem).
  • Foreign exchange market
    Market where operators (financial institutions and companies) buy one currency with another and where exchange rates are thus established.
  • Foreign exchange reserves
    Deposits and securities in foreign currencies and gold, held by the central banks.
  • Foreign exchange swap
    Simultaneous spot and forward transactions exchanging one currency against another. The Eurosystem can execute open market operations in the form of foreign exchange swaps, where the national central banks (or the ECB) buy or sell euro spot against a foreign currency and, at the same time, sell or buy them back in a forward transaction.
  • General Agreements to Borrow (GAB)
    An agreement concluded in 1962 by the 10 richest IMF member countries, including Belgium, whereby they made additional resources available to the Fund on top of the fixed quota. The GAB participants are known as the G10, although in 1964 Switzerland became the eleventh country to join.
  • General Commission for the Euro
    The General Commission for the Euro was set up in Belgium in 1996 to coordinate and stimulate public and private sector initiatives relating to the switch to the single European currency, and to ensure that the changeover to the euro went as smoothly as possible. The Commission was installed at the National Bank of Belgium, which provided the staff for it and arranged its activities. The General Commission for the Euro was dissolved soon after the introduction of the euro notes and coins in the spring of 2002.
  • General Council (ECB)
    One of the decision-making bodies of the ECB. It comprises the President and the Vice-President of the ECB and the governors of all EU national central banks.
  • Governing Council (ECB)
    The supreme decision-making body of the ECB. It comprises all the members of the Executive Board of the ECB and the governors of the national central banks of the countries that have adopted the euro.
  • Gross domestic product (GDP)
    Value added (gross, i.e. before deducting depreciation) of the national economy during a given period. Changes over time are due to changes in the quantities produced (change in real GDP or GDP at constant prices) and price movements.
  • Gutt operation
    Post-war currency reform directed by the Finance Minister Camille Gutt, which aimed to reduce the money supply and stabilise prices. Money was taken out of circulation and bank deposits, demand accounts and time accounts were frozen. The “funds temporarily unavailable” were released in 1949 while the “permanently frozen” sums were repaid in stages from the 1950s onwards.
  • Harmonised index of consumer prices (HICP)
    Measure of the general level of consumer prices, indicating the relationship between the average price for a set of goods and services observed during the period under review and that observed in a base period.
  • Hire-purchase contract
    With a hire-purchase contract, the consumer acquires moveable property which he pays for in several instalments.
  • Income statement (Annual account)
    The income statement presents an overall picture of the income and expenses flows over some period in time, a fiscal year. The income statement makes a distinction between operating results, financial results and extraordinary results.
  • Inflation
    General and persistent rise in prices
  • Instalment loan
    In the case of an instalment loan, a sum of money is put at the consumer's disposal and he pledges to repay this by regular payments.
  • Interest rate
    The amount that a debtor has to pay to the creditor over a given period of time in relation to the amount of the principal of the loan, deposit or debt security, usually expressed in annual percentage terms.
  • International Accounting Standards (IAS)
    Generally recognised accounting principles issued by the International Accounting Standards Board (IASB), an independent, privately funded setter of accounting standards. These are enforceable global standards relating to the provision of transparent and comparable information in general-purpose financial statements. In April 2001 the IASB announced that its accounting standards would in future be designated International Financial Reporting Standards (IFRS).
  • International Monetary Fund (IMF)
    The International Monetary Fund (IMF) was set up in 1944 at Bretton Woods in the United States, at the same time as the World Bank. As one of the Bretton Woods institutions, the IMF aims to promote international monetary cooperation and to facilitate the balanced expansion of international trade.
  • Intrastat
    Via the monthly intrastat declaration companies provide information about their intercommunity (intra-EU) flows of goods, unless these do not exceed a threshold calculated on an annual basis. This declaration, which includes all data regarding goods arriving from other Member States and goods being sent to other Member States, is to be sent directly to the National Bank.
  • Labour market
    The labour market is the market on which the demand for and the supply of labour meet. Demand for labour comes from employers and labour is supplied by employees.
  • Latin Monetary Union
    The Latin Monetary Union (1865-1926) was an agreement between a number of countries whereby their coins were minted according to exactly the same monetary standard. While the large silver and gold coins of the different countries varied in external appearance, they now had the same value. The countries which joined the Latin Monetary Union were France, Italy, Switzerland, Belgium and Greece.
  • Ledger
    The complete list of the registered creditors for a specific government bond. The Ledgers Department is part of the Administration of the Treasury and administers these registrations by name on behalf of both individuals and legal entities. It also guarantees payment of the interest instalments and repayment of the capital on the maturity date.
  • Legal tender
    ‘Legal tender’ means that a specific monetary instrument must, by law, be accepted in payment. The Belgian banknote did not become legal tender until 1873.
  • Lender of last resort
    If, owing to a temporary shortage of liquidity (e.g. in the case of sudden cash withdrawals), the commercial banks are unable to meet the demand from their customers, this may cause serious disruption of the financial system. In that case, the central bank can intervene in order to provide the banks with the necessary resources. By supervising the financial markets and participating in the development of prudential standards and rules, the National Bank ensures that such crises are avoided as far as possible.
  • Liquidity management
    Intervention on the money market by the Eurosystem, via open market operations, to regulate the amount of deposits by credit institutions with the Eurosystem and very short-term interest rates.
  • Liquidity risk
    The risk that a counterparty or a participant in a payment or settlement system will not settle an obligation at its full value when due. Liquidity risk does not imply that the counterparty is insolvent, since it may be able to settle the required debt obligations at some unspecified time thereafter.
  • Longer-term refinancing operation
    A monthly open market operation, conducted by the Eurosystem, with a usual maturity of three months.
  • Lottery loan
    A loan which is repaid partially every year by means of a draw for redemption of a number of security numbers. Occasionally the draws for redemption may also include a premium.
  • M1
    Narrow monetary aggregate. Comprises currency in circulation plus overnight deposits held with MFIs and central government (e.g. at the post office or treasury).
  • M2
    Intermediate monetary aggregate. Comprises M1 and deposits redeemable at a period of notice of up to and including three months (i.e. short-term savings deposits) and deposits with an agreed maturity of up to and including two years (i.e. short-term time deposits) held with MFIs and central government.
  • M3
    Broad monetary aggregate. Comprises M2 and marketable instruments, i.e. repurchase agreements, money market fund shares and units and debt securities with a maturity of up to and including two years issued by MFIs.
  • Maastricht Treaty
    Treaty on the European Union, which was signed in Maastricht on 7 February 1992 and entered into force on 1 November 1993, establishing Economic and Monetary Union in three stages. Stage 3 (adoption of the single currency) began on 1 January 1999.
  • Main refinancing operation
    A weekly open market operation conducted by the Eurosystem.
  • Marginal interest rate
    Interest rate at which the total credit to be allotted in a tender is achieved and below which bids are rejected.
  • Marginal lending facility
    A standing facility of the Eurosystem which counterparties may use to receive credit from a national central bank at a pre-specified interest rate against eligible assets.
  • Minimum bid rate
    The lower limit to the interest rates at which counterparties may submit bids in the variable rate tenders of the main refinancing operations. This is one of the key ECB interest rates reflecting the stance of monetary policy.
  • Minimum reserves
    Interest-bearing overnight deposits which credit institutions in the euro area must hold with the Eurosystem. The average deposits held by any given institution during each one-month period must total 1 p.c. of certain liabilities of that institution.
  • Monetary analysis
    One pillar of the ECB’s framework for conducting its comprehensive analysis of the risks to price stability, which forms the basis for the Governing Council’s monetary policy decisions. Monetary analysis helps to assess medium to long-term trends in inflation, in view of the close relationship between money and prices over extended horizons. The monetary analysis takes into account developments in a wide range of monetary indicators including M3, its components and counterparts, notably credit, and various measures of excess liquidity. See also: economic analysis.
  • Money market
    Market where credit institutions engage in mutual short-term lending (generally up to one year) in order to adjust their deposits with the Eurosystem. The euro area money market is a single market: any difference in interest rates between countries would give rise to arbitrage.
  • Money on accounts
    Money in intangible form, as credit entries on demand accounts held with banks, postal accounts or public Treasury accounts.
  • Money supply
    Strictly speaking, all assets which serve as means of payment, such as notes and coins (fiduciary money) and sight deposits (money recorded on accounts). In the broad sense it also includes assets which can be converted into means of payment fairly quickly and at low cost, such as savings deposits.
  • Mortgage
    A mortgage is a loan contracted by a natural person for private purposes and used to finance the purchase of real estate (either an existing building, a new construction or renovation of a property).
  • NACE
    The Statistical classification of economic activities in the European Community, abbreviated as NACE, is the nomenclature of economic activities in the European Union (EU); the term NACE is derived from the French Nomenclature statistique des activités économiques dans la Communauté européenne. Various NACE versions have been developed since 1970.
  • National Accounts Institute (NAI)
    The National Accounts Institute’s job is to produce the principal macroeconomic statistics and forecasts. For that purpose, the NAI collaborates with three associated institutions, the National Statistical Institute, the Federal Planning Bureau and the National Bank of Belgium.
  • National accounts
    Accounts describing the national economy, namely transactions relating to products (domestic production, imports, consumption, investment and exports), distributive transactions (income and transfers) and the financial transactions of the main sectors (companies, households and general government) and the economy as a whole.
  • Notes (Annual account)
    The notes provide specified figures as to various headings in the balance sheet and elucidates them more thoroughly.
  • OLO (Linear bonds)
    Long-term bonds issued by the Belgian State with a fixed interest rate, duration and redemption price. They are issued in two-monthly tranches and the issue price is determined by tendering.. They are dematerialised and are recorded in an account and purchase and sale transactions are effected via the National Bank of Belgium’s clearing system or through other securities depository centres such as Euroclear or Clearstream..
  • Open market operation
    Operation executed on the initiative of the ECB in the financial markets.
  • Organisation for Economic Cooperation and Development (OECD)
    An intergovernmental organisation, based in Paris, with 30 member countries, aimed at promoting sustainable growth, employment and the standard of living of its members and stimulating international economic development and world trade.
  • Overdraft
    An overdraft or credit facility is a reserve of money put at the consumer's disposal which can be used if neededand isusually linked to a credit card. Credit lines linked to a current account which give the account-holder the possibility of going below zero and temporarily having a negative balance also fall into this category.
  • Oversight
    The oversight of payment systems is an essential function of central banks and aims to ensure the smooth functioning of payment systems and to contribute to financial stability.
  • Payment systems
    Set of instruments, procedures, etc. and in general, systems for transferring funds between banks aimed at facilitating the circulation of money.
  • Price stability
    The maintenance of price stability is the primary objective of the Eurosystem. The Governing Council defines price stability as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%. The Governing Council has also made it clear that, in the pursuit of price stability, it aims to maintain inflation rates below, but close to, 2% over the medium term.
  • Primary market
    Market where new loans are issued.
  • Promissory note
    The promissory note only differs from a bill of exchange in that it is issued in the form of a promise of payment made by the debtor instead of an order or payment order by the creditor.
  • Protest
    Official statement by a bailiff of the non-payment of a commercial bill.
  • Real interest rate
    Yield on a claim (e.g. a bond) after deduction of the loss of purchasing power suffered due to inflation.
  • Registration by name
    Entry in a special register (‘Ledger’), with the creditor’s identity and the amount of his debt.
  • Repurchase agreement
    An agreement to sell an asset and to repurchase it at a specified price on a predetermined future date or on demand. Such an agreement is similar to collateralised borrowing, although it differs in that the seller does not retain ownership of the assets. Sale and repurchase agreements are also termed repo transactions and are traded on the repo market.
  • Reserve base
    The sum of the balance sheet items (in particular liabilities) which constitute the basis for calculating the reserve requirement of a credit institution.
  • Reserve ratio
    A ratio defined by the central bank for each category of balance sheet items included in the reserve base. The ratios are used to calculate reserve requirements.
  • SITC
    The Standard international trade classification, abbreviated as SITC, is a product classification of the United Nations (UN) used for external trade statistics (export and Import values and volumes of goods), allowing for international comparisons of commodities and manufactured goods.
  • Secondary market
    Market where transactions are carried out concerning financial instruments in circulation.
  • Sector of activity
    A sector of activity is a group of enterprises producing similar goods or services.
  • Securities settlement system (SSS)
    A securities settlement system guarantees the secure handling of transactions in dematerialised securities on the primary and secondary markets. It also ensures that delivery of and payment for the securities are effected simultaneously (delivery against payment principle).
  • Single Resolution Mechanism (SRM)
    The SRM, a key pillar of the banking union, provides tools and instruments for the recovery and resolution of credit institutions and certain investment firms in the euro area and other participating Member States.
  • Single Supervisory Mechanism (SSM)
    The Single Supervisory Mechanism (SSM) is a new framework for banking supervision in Europe. It comprises the ECB and national supervisory authorities of participating EU countries. Its main aims are to ensure the safety and soundness of the European banking system and to increase financial integration and stability in Europe. The SSM is an important milestone towards a banking union within the EU.
  • Stability and Growth Pact
    The Stability and Growth Pact aims at safeguarding sound public finances in Stage Three of Economic and Monetary Union in order to strengthen the conditions needed, on the one hand, for strong, sustainable growth conducive to employment creation and, on the other hand, for price stability. More specifically, budgetary positions close to balance or in surplus are required as the medium-term objective, which would allow Member States of the EU to deal with normal cyclical fluctuations while keeping the government deficit below the level of 3 p.c. of GDP.
  • Standing facility
    “Window” the Eurosystem offers to credit institutions in the euro area, enabling them to execute operations on their own initiative at pre-announced interest rates. The Eurosystem offers two overnight standing facilities: the marginal lending facility and the deposit facility.
  • Strips (Separate trading of interest and principal)
    Linear bonds whose coupons and principal are traded separately.
  • Structural operation
    Open market operation executed in order to bring about a lasting change in the structure of the Eurosystem’s balance sheet.
  • Sureties
    Cash, bonds and savings notes of the EU that are deposited with the Belgian Deposit and Consignment Office in connection with administrative consignments or by virtue of social security laws.
  • Swift
    Enterprise, jointly managed by the international banking community, which provides banks across the world with a network via which they can exchange messages concerning payments to each other and securities transactions. These messages are considered to be binding. The confidentiality of this system of exchange is based on its membership to which a number of entry requirements are attached, a computer network which is closely safeguarded and well developed, and the use of a standardised code language for messages, whose format is centrally designed and managed by Swift.
  • Systemic risk
    The risk that the failure of one participant in a funds transfer system or exchange-for-value system, or in financial markets generally, to meet its required obligations will cause other participants or financial institutions to be unable to meet their obligations (including settlement obligations in a transfer system) when due. Such a failure may cause significant liquidity or credit problems and, as a result, might threaten the stability of financial markets.
  • TARGET2 (Trans European Automated Real-Time Gross settlement Express Transfer)
    The European cross border payment system linking the national so called gross settlement systems (that settle payment by payment and not only a balance at the end of the day) of the EU countries with the payment system of the European Central Bank. This system is used for very large payments expressed in euros that stem primarily from transactions on financial markets.
  • Trade balance
    The trade balance is the difference between the value of the goods that a country exports and the value of the goods that it imports. The total trade balance, including all goods exported and imported, is one of the major components of the balance of payments.
  • Traditional government bonds
    Medium and long-term government bonds open for subscription to both private and institutional investors. Since 1996 they have been replaced by government notes open for subscription to private investors only.
  • Treasury certificates
    Short-term securities in euro issued by the Treasury by tender.
  • Treaty of Rome
    The Treaty of Rome, which was signed by six countries on 25 March 1957 (Belgium, Netherlands, Luxembourg, Germany, France and Italy) was intended to set up a common market and an Economic and Monetary Union.
  • Velocity of circulation
    Number of times money –e.g. M3 is used during a given period-e.g. one year, to settle transactions-e.g. those recorded by GDP. The velocity of circulation of M3 is the relation GDP/M3.
  • Werner Report
    The Werner Report (named after the Luxembourg prime minister) dated October 1970 contained a blueprint for the progressive creation of the Economic and Monetary Union.
  • World Trade Organisation (WTO)
    The World Trade Organisation was set up in 1995 and is concerned with the rules governing trade between countries. Its primary task is to promote trade efficiency, predictability and freedom.
  • XBRL (Extensible Business Reporting Language)
    XBRL is a rapidly emerging computer language for the electronic exchange and standardisation of financial reporting through the internet. The non-profit-making organisation XBRL Belgium has been set up to encourage its use in Belgium.