ABS (Asset-backed security): financial instrument whose payments are collateralized ("backed") by a pool of underlying assets that are usually small, illiquid and unable to be sold individually - hence the process of securitization.
ANFA (Agreement on Net Financial Assets): confidential agreement between ECB and national central banks concerning the purchase of sovereign debt (financial assets) by the central banks, such as the purchase of Greek debt paper, for the banks' own account - as opposed to SMP programs in which ECB or the central banks are operating within the Eurosystem.[1]
ARRA (American Recovery and Reinvestment Act; commonly called "the Stimulus Package”): legislation enacting net-deficit spending measures voted by the U.S. Congress and signed into law by President Barack Obama, in February 2009, often compared with stimulus measures undertaken by Eurozone member-states.[2][3]
Brexit or Brixit (British exit): term initially introduced in 2012 in world business trading, referring to the possibility that the United Kingdom could leave the European Union. Following the 2016 referendum, Britain exited from the European Union at 23:00 GMT on 31 January 2020, and, from then on, the term denotes a real event.
CAC 1. Collective action clause: agreement in the issuance of bonds that allows a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond, including those who vote against the restructuring. 2. Capital account convertibility : the extent to which a nation's financial regime allows transactions of local financial assets into foreign financial assets freely and at market-determined exchange rates.
CAR (Capital Adequacy Ratio, aka Capital-to-Risk Weighted Assets Ratio or CRAR): the ratio of a bank's capital to its risk.
CDS (Credit default swap): financial agreement whereby one side (the seller of the CDS) agrees to compensate the other side (the CDS buyer) in the event of a loan default or other credit event. The buyer makes a series of payments (called "fee" or "spread") to the seller and, in exchange, receives a payoff if the loan defaults. An LCDS (Loan-only credit default swap) is a CDS whose underlying security is strictly a syndicated, secured loan, and never a bond.
CEBS (Committee of European Banking Supervisors): former independent advisory committee of the European Union (EU), tasked with banking supervision within the EU. Predecessor of the European Banking Authority (EBA).
CET1 (Common Equity Tier 1): percentage of bank capital that B III standards require banks to fund with RWAs (risk-weighted assets) composed of shareholders' equity, including audited profits, goodwill, and other intangible assets - less accounting reserves that are not loss absorbing. Currently, and since 2015, it stands at 4.5%.
COSAC (French: Conférence des organes spécialisés dans les affaires communautaires et européennes des parlements de l'Union européenne - Conference of Community and European Affairs Committees of Parliaments of the European Union): conference of Members of the European Parliament and national Members of Parliament (MPs) drawn from parliamentary committees responsible for European Union affairs; mainly intended for personal contacts and exchange of information but also adopts proposals to EU institutions.
DSA (Debt sustainability analysis): IMF's analysis of a country's capacity to finance its policy objectives and service the ensuing debt without unduly large adjustments, conducted through a formal framework that became operational in 2002.
EBA (European Banking Authority): regulatory agency of the EU, established on 1 January 2011, whose activities include conducting stress tests on European banks to identify weaknesses in banks' capital structures. It is part of the European System of Financial Supervision (ESFS).
EBF (European Banking Federation): organisation, currently numbering around five thousand members, representing the interests of European banks in the European Union.
ECB (European Central Bank): the institution of the European Union (EU) that administers the monetary policy of the Eurozone member-states and the exclusive issuer of euro banknotes.
EEA (European Economic Area): the geographical free-trade area, established in 1994, that comprises the European Union and EFTA, except for Switzerland.
EFSM (European Financial Stabilisation Mechanism): emergency funding programme reliant upon funds raised on the financial markets and guaranteed by the European Commission using the budget of the European Union as collateral.
EFTA (European Free Trade Association): an association, established in 1960, of originally seven (Greek: εφτά, eftá: seven) and currently four European countries (Liechtenstein, Iceland, Norway, and Switzerland), which operates in parallel and is linked to the European Union (EU).
EIOPA (European Insurance and Occupational Pensions Authority): financial regulatory institution of the European Union, whose core responsibilities are the support of the stability of the financial system, the maintenance of transparency in the financial markets and products, as well as the protection of insurance policyholders, pension scheme members and beneficiaries. It is part of the European System of Financial Supervisors (ESFS).
EMU (Economic and Monetary Union; synonymous to Eurozone): umbrella term for the group of policies aimed at converging the economies of European Union members so as to allow them to adopt a single currency, the euro.
ESA or ESA95 (European system of national and regional accounts): the European system of collecting comparable, up-to-date and reliable information on the economy of the European Union's member states. It is broadly consistent with the System of National Accounts of the United Nations.
ESM (European Stability Mechanism): international organisation located in Luxembourg, which provides financial assistance to Eurozone members in financial difficulty, replacing EFSF and EFSM, which will continue to handle transfer and monitoring of the previously approved bailout loans for Ireland, Portugal and Greece.
ESMA (European Securities and Markets Authority): financial regulatory institution of the European Union, whose task is to improve the functioning of financial markets in Europe and strengthen investor protection. It is part of the European System of Financial Supervision (ESFS).
ESRB (European Systemic Risk Board) : agency tasked with the macro-prudential oversight of the financial system within the European Union. It is under the responsibility of the European Central Bank (ECB).
EU (European Union): the economic and political union or confederation of 28 European member-states.
Euribor (Euro Interbank Offered Rate): the daily reference rate based on the averaged interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the Euro wholesale money market (or interbank market). Euribors are used as a reference rate for Euro-denominated instruments, just as LIBORs are commonly used for Sterling and US dollar-denominated instruments. (See also Eonia.)
Eurodad (European Network on Debt and Development): network of European non-governmental organisations that research issues related to debt, development finance and poverty reduction.
Eurostat: the Directorate-General of the European Commission responsible for collecting statistical information from member states and providing them to the European Union, codified and summarised under the concept of the European Statistical System. It is also assigned the task of promoting the integration of statistical methods across member states, candidate European Union countries and EFTA countries.
Eurosystem: the monetary authority of the Eurozone, consisting of the European Central Bank (ECB) and the central banks of the member states that belong to the Eurozone. The function of the Eurosystem is to apply the monetary policy decided by the ECB. See also ESCB.
FATF (Financial Action Task Force on Money Laundering), also GAFI (Groupe d'Action Financière): intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering; intensified European money laundering investigations during the crisis.[4]
FDI (Foreign direct investment): investment by foreign nationals into a country; measure of attractiveness of country's economic conditions and prospects. Total FDI in Europe fell as a result of the crisis.
GDP (Gross domestic product): the market value of all goods and services produced within a country in a given period, usually one year. (See also GNP)
GFC (Global financial crisis): term denoting the financial crisis of 2007–2008.
GNP (Gross National Product): the market value of all goods and services produced by the residents of a country in a given period, usually one year. (See also GDP)
Grexit (Greek Euro Area exit): slang term introduced in 2012 in world business trading, referring to the possibility that Greece could leave the Eurozone, and possibly re-adopt its old currency, the drachma.
IMF (International Monetary Fund): international organization, created in 1944, having as objective to stabilize exchange rates and assist in the reconstruction of the world's international payment system, whenever necessary.
ISDA (International Swaps and Derivatives Association): trade organization of participants in the market for over-the-counterderivatives. Most credit default swaps (CDSs) use standard forms promulgated by ISDA, although some are tailored to meet specific needs. On March 2012, ISDA, by declaring that Greece had instigated a credit event, triggered payment on default insurance contracts.
LIBOR (London Inter-Bank Offered Rate): the average interest rate that leading banks in London charge when lending to other banks. It is widely used as a reference rate for many financial instruments, including sovereign loans. LIBORs are commonly used for Sterling and US dollar-denominated instruments, just as Euribors are used as a reference rate for Euro-denominated instruments. (See also Libor scandal.)
LLR (Lender of last resort): term denoting an institution willing to extend credit when no one else will. In the Eurozone, the lender of last resort for banks is the European Central Bank (ECB).
LTRO (Long-term refinancing operation): ECB programme of low-interest loans to European banks but not to European states, accepting loans from the portfolio of the banks as collateral.
MIP (Macroeconomic Imbalance Procedure): set of measures and policies, part of EU's sixpack legislation, designed to prevent and correct ostensibly risky macroeconomic developments, such as high current-account deficits, unsustainable external indebtedness and housing bubbles.
Moneyval (Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism): institution within the Council of Europe and answerable directly to the Committee of Ministers, having the task of monitoring the status and implementation of anti-money laundering measures in Europe.
NAMA (National Asset Management Agency): institution created by the Government of Ireland, in late 2009, in response to the Irish financial crisis and the deflation of the Irish property bubble. It functions as a bad bank, acquiring property development loans from Irish banks in return for government bonds, primarily with a view to improving the availability of credit in the Irish economy.
NCB (National central bank): the institution that manages a nation's currency, money supply, and interest rates. The NCBs of Eurozone's member-states have ceded to the European Central Bank most rights for major central-bank operations.
NIIP (Net international investment position); also, sometimes, NIP : the difference between a country's external financial assets and its external financial liabilities. A country's IIP (international investment position) is the financial statement setting out the value and composition of that country's external financial assets & liabilities.
NPM (New public management): government policies that aim to modernise and render more effective the public sector. Part of IMF and ECB recommendations to Eurozone countries.
NTMA (National Treasury Management Agency): government agency, established in 1990, which manages the assets and liabilities of the Government of Ireland, borrows for the exchequer, and manages the national debt.
OMT (Outright Monetary Transactions): ECB's purchases ("outright transactions") in sovereign-bond secondary markets, within the Eurosystem, and also, under certain conditions, of bonds issued by Eurozone member-states. OMT replaces the bank's Securities Markets Programme (SMP).
PEPP (Pandemic Emergency Purchase Programme): the temporary asset-purchase programme[5] of private and public sector securities initiated on 18 March 2020[6] by the ECB to counter the financial risks posed by the outbreak of covid-19. The programme was terminated on 31 March 2022.[7]
PSI (Private sector involvement): participation of private creditors in sovereign-debt restructuring deals. The participation of state sectors is denoted as OSI (official sector involvement).
SDR (Special drawing rights): supplementary foreign-exchange reserve assets maintained by the International Monetary Fund (IMF), which represent a claim to currency held by IMF member-countries for which they may be exchanged. An SDR functions as the unit of account for the IMF.
SGP (Stability and Growth Pact): agreement among the member-states of the European Union, to facilitate and maintain the stability of the Economic and Monetary Union. In order for member-states to join the Eurozone, they would have to abide by the criteria for public finances which the Maastricht Treaty defined, such as member-states having (a) an annual budget deficit no greater than 3% of GDP, and (b) a national debt no greater than 60% of GDP.
SPE (Special purpose entity); also SPV (Special purpose vehicle): legal entity created to fulfill narrow, specific and/or temporary objectives. Usually a limited company of some type or a limited partnership.
SPV : See SPE.
SRM (Single Resolution Mechanism): decision process that applies to banks covered by the Single Supervisory Mechanism. SRM covers all banks established in the Eurozone.
TARGET (Trans-European, Automated, Real-time, Gross Settlement, Express Transfer system): interbank payment system for the real-time processing of cross-border money transfers throughout the European Union.
TARGET2: the current, 2nd generation of TARGET, in place since November 2007.
