All glossary entries

The sale or purchase of goods or services through electronic transactions conducted via the internet or other computer-mediated networks.

exposure at default

A technique for identifying collateral whereby assets provided as collateral are attributed to individual transactions. Antonym: collateral pool

A system for central banks' collateral management where liquidity is provided against assets earmarked for each individual transaction.

See European Banking Authority (EBA)

earnings before interest, taxes, depreciation and amortisation

excess bond premium

See Electronic Bill Presentment and Payment (EBPP; electronic invoicing)

European Court of Auditors

Eurosystem credit assessment framework

See European Central Bank (ECB)

A legal act adopted by the ECB in the exercise of the tasks and powers conferred on it by the SSM Regulation. It is addressed to one or more supervised entities or supervised groups or one or more other persons and is not a legal act of general application.

The time of the place in which the ECB is located.

expected credit loss

Economic and Financial Affairs Council. See Council of the European Union (EU Council)

See Council of the European Union (EU Council)

One part of the integrated analytical framework that forms the basis for the Governing Council’s monetary policy deliberations. The economic analysis is built around: short-term developments in economic growth, employment and inflation, and the assessment of the drivers of shocks that hit the euro area economy; the Eurosystem and ECB staff projections of key macroeconomic variables over a medium-term horizon; and the evaluation of the risks to economic growth and price stability. In addition, it looks at structural trends in the euro area economy and their implications for inflation, the potential output of the economy and the equilibrium real rate of interest; it considers the role and importance of heterogeneities and of non-linearities; and it makes use of granular data, including surveys of expectations, such as the Consumer Expectations Survey.

A consultative EU body set up at the start of Stage Three of Economic and Monetary Union (EMU). The Member States, the European Commission and the ECB each appoint no more than two members of the Committee. Each Member State selects one member from among the senior officials of its national administration, and the second member from among the senior officials of its national central bank. However, the national central bank members only participate in EFC meetings when issues of their institution's particular expertise or competence are being discussed. Article 134(2) of the TFEU contains a list of the tasks of the Economic and Financial Committee.

The outcome of the process laid down in the Treaty establishing the European Community for harmonisation by EU Member States of economic and monetary policies and for introduction of the euro. Three stages were provided for: Stage One (1 July 1990 to 31 December 1993), removal of barriers to free movement of capital within the EU, better coordination of economic policies and closer cooperation between central banks, Stage Two (1 January 1994 to 31 December 1998), establishment of the European Monetary Institute (EMI) followed by preparations for introduction of the euro, avoidance of excessive deficits and enhanced convergence of policies (to ensure stable prices and sound public finances). Stage Three (from 1 January 1999) began with irrevocable fixing of exchange rates, transfer of monetary competence to the ECB and the introduction of the euro. The TFEU no longer refers to the three stages of EMU, as this progressive terminology is outdated. See also Treaty on the Functioning of the European Union

The accounting approach under which deals are recorded on the transaction date.

An ICAAP perspective under which the institution manages its economic capital adequacy by ensuring that its economic risks are sufficiently covered by available internal capital. A similar concept exists for the ILAAP. See also Internal Capital Adequacy Assessment Process (ICAAP), Internal Liquidity Adequacy Assessment Process (ILAAP)

See economic internal ICAAP perspective (economic perspective)

See European Currency Unit (ECU)

expected default frequency

See electronic data interchange (EDI)

European Deposit Insurance Scheme

See excessive deficit procedure (EDP)

European Data Warehouse

See European Economic Area (EEA)

See effective exchange rate (EER) of the euro

An effective exchange rate of the euro against the currencies of the seven non-euro area EU Member States and eleven of the euro area’s trading partners outside the EU. See also effective exchange rate (EER) of the euro

An effective exchange rate of the euro encompassing the EER-18 and 23 additional countries. See also effective exchange rate (EER) of the euro

See Economic and Financial Committee (EFC)

A weighted average of bilateral euro exchange rates against the currencies of the euro area’s main trading partners. The EER indices of the euro are calculated against different groups of trading partners (see EER-18 and EER-41). The weights used reflect the share of each partner country in the euro area’s trade in manufactured goods and services and account for competition in third markets. See also nominal effective exchange rate (EER) of the euro, real effective exchange rate (EER) of the euro

A limit to how low interest rates can go. It exists because, rather than buying a financial asset that earns a negative interest rate, you can always decide to hold your assets in cash, which earns zero interest. In reality, the limit may be below zero, as storing cash actually generates some costs (e.g. it might require secure storage facilities). When the ECB has little room to cut interest rates because they are near the effective lower bound, it can use other tools such as asset purchases. See also asset purchases, new monetary policy instruments

See European Financial Stability Facility (EFSF)

See European Financial Stabilisation Mechanism (EFSM)

A terminal which captures payment information by electronic means and transmits such information either online or offline. “EFTPOS” stands for “electronic funds transfer at point of sale”. See also point-of-sale (POS) terminal

European Insurance and Occupational Pensions Authority

See effective lower bound (ELB)

expected loss best estimate

The proportion of the population of a country aged 65 and over in relation to the population aged 15 to 64.

Services which enable the electronic transmission, browsing and payment of invoices.

The exchange between commercial entities (in some cases also public administrations), in a standardised electronic format, of data relating to a number of message categories, such as orders, invoices, customs documents, remittance advices and payments. EDI messages are sent through public data transmission networks or banking system channels. Any movement of funds initiated by EDI is reflected in payment instructions flowing through the banking system. UN/CEFACT, a United Nations body, has established a set of standards relating to electronic data interchange for administration, commerce and transport (EDIFACT).

See Electronic Bill Presentment and Payment (EBPP; electronic invoicing)

A monetary value, represented by a claim on the issuer, which is: 1) stored on an electronic device (e.g. a card or computer); 2) issued upon receipt of funds in an amount not less in value than the monetary value received; and 3) accepted as a means of payment by undertakings other than the issuer.

A term used in EU legislation to designate credit institutions which are governed by a simplified regulatory regime because their activity is limited to the issuance of electronic money and the provision of financial and non-financial services closely related to the issuance of electronic money.

A personalised device (or a set of devices), software and/or set of procedures agreed between the end user and the payment service provider to request the execution of an electronic transfer of value.

A set of operational functionalities which support the end users of multiple payment service providers in the use of electronic payment instruments. An electronic payment instrument arrangement is managed by a governance body which, inter alia, issues the relevant rules or terms and conditions. The operational functionalities are not essential for the functioning of an electronic payment instrument scheme and include (i) payment initiation and facilitation of transfers of value and (ii) the storage or registering of personalised security credentials or data related to electronic payment instruments.

A set of formal, standardised and common rules enabling the transfer of value between end users by means of electronic payment instruments. It is managed by a governance body.

A string of data, generated by a cryptographic method, which is attached to an electronic message in order to guarantee its authenticity, identify the signatory and link the content to that signatory (thereby protecting the recipient against repudiation by the sender).

See digital wallet (electronic wallet)

Assets which can be used as collateral in order to obtain credit from the Eurosystem.

See eligible assets (eligible collateral)

See electronic money institution (ELMI)

See European Monetary Institute (EMI)

European Market Infrastructure Regulation

Euro Money Market Survey

Guidelines adopted by the EU Council in line with Article 148(2) TFEU to provide the framework for defining the employment policies of the Member States and of the Union. See also Broad Economic Policy Guidelines (BEPGs), Integrated Guidelines

See European Monetary System (EMS)

See Economic and Monetary Union (EMU)

An acronym describing the set of specifications developed by the consortium EMVCo, which is promoting the global standardisation of electronic financial transactions – in particular the global interoperability of chip cards. “EMV” stands for “Europay, MasterCard and Visa”.

A natural or legal person making use of an electronic payment instrument governed by a scheme/arrangement for the transfer of value, in the capacity of payer, payee, or both.

Powers available to the ECB aimed respectively at (i) compelling a supervised entity or person to comply with the prudential requirements, and (ii) punishing a supervised entity for lack of compliance with the prudential requirements through a pecuniary sanction.

The non-standard measures taken by the ECB/Eurosystem during the financial crisis with a view to supporting financing conditions and credit flows above and beyond what could be achieved through reductions in key ECB interest rates alone.

See euro overnight index average (EONIA)

The interest rate consistent with inflation at its target and where the economy is operating at its potential. There is broad consensus that a decline in productivity growth, demographic factors and persistently higher demand for safe and liquid assets in the wake of the global financial crisis have contributed to lowering the equilibrium real interest rate, although estimates remain subject to uncertainty. The decline in the equilibrium real interest rate has made it harder for the ECB to combat disinflationary shocks solely by cutting interest rates.

All instruments and records acknowledging claims on the residual value of a corporation or quasi-corporation after the claims of all creditors have been met. Equity comprises equity securities and other financial instruments not classified as securities.

The market in which equities are issued and traded.

The risk of loss arising from movements in equity prices. The Eurosystem is exposed to equity price risk in its monetary policy operations to the extent that equities are considered to be eligible as tier two assets.

A negotiable financial instrument representing ownership of a stake in a corporation, comprising shares traded on a recognised stock exchange or any other form of organised secondary market (quoted or listed shares) and unquoted or unlisted shares. Equity securities usually produce income in the form of dividends.

See exchange rate mechanism II (ERM II)

The mutually agreed floor and ceiling within which ERM II member currencies are allowed to fluctuate against the euro. See also exchange rate mechanism II (ERM II)

Euro Retail Payments Board

An item in b.o.p. statements used to offset the overstatement or understatement of the other b.o.p. components.

European Supervisory Authority

See European System of Accounts 2010 (ESA 2010)

See European System of Accounts 1995 (ESA 95)

See European System of Central Banks (ESCB)

European Systemic Cyber Group

See European System of Financial Supervision (ESFS)

See European Stability Mechanism (ESM)

European Securities and Markets Authority

See European Systemic Risk Board (ESRB)

exchange-traded fund

The European Union currently has 27 Member States. In addition to the first six Member States of the EEC — Belgium, France, Germany, Italy, Luxembourg and the Netherlands — 21 further countries are now members of the Union. These are: Denmark and Ireland (1973); Greece (1981); Spain and Portugal (1986); Austria, Finland and Sweden (1995); the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (2004); Bulgaria and Romania (2007); and Croatia (2013). Albania, Moldova, Montenegro, North Macedonia, Serbia, Türkiye and Ukraine have the status of candidate countries. The United Kingdom was a member of the European Union from 1973 until its withdrawal in 2020.

See Member State

European centralised infrastructure for supervisory data

See euro interbank offered rate (EURIBOR)

The name of the European single currency adopted by the European Council at its meeting in Madrid on 15 and 16 December 1995.

The area formed by the EU Member States whose currency is the euro and in which a single monetary policy is conducted under the responsibility of the Governing Council of the ECB. The euro area currently comprises Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

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.

A measure of the effective interest rate prevailing in the euro overnight market, calculated i) (up to 30 September 2019) as a weighted average of the interest rates on unsecured interbank overnight lending transactions denominated in euro, as reported by a panel of banks; and ii) (from 2 October 2019 until its discontinuation on 3 January 2022) as the €STR plus a fixed spread of 8.5 basis points, with the €STR reflecting the trading activity of the previous TARGET2 business day. See also euro short-term rate (€STR)

A reference rate, based on money market statistical reporting data collected by the Eurosystem, reflecting the wholesale euro unsecured overnight borrowing costs of banks located in the euro area and first published by the ECB on 2 October 2019. The €STR is published on each TARGET2 business day on the basis of the previous day’s trading activity.

An informal gathering of the ministers of economics and finance of the euro area member countries, at which they discuss issues connected with their shared responsibilities in respect of the single currency. The European Commission and the ECB are invited to take part in the meetings. The Eurogroup usually meets immediately before an Ecofin Council meeting.

An independent EU authority established on 1 January 2011 as part of the European System of Financial Supervision to ensure effective and consistent prudential regulation and supervision across the EU banking sector. Its main task is to contribute to the creation of the European single rulebook in banking, the objective of which is to provide a single set of harmonised prudential rules throughout the EU. See also European System of Financial Supervision (ESFS)

The ECB was established on 1 June 1998 in Frankfurt am Main as the body at the centre of the European System of Central Banks (ESCB) and the Eurosystem. Together with the national central banks of the EU Member States whose currency is the euro, the ECB defines and implements the monetary policy for the euro area. Since the entry into force of the Treaty of Lisbon on 1 December 2009, the ECB has been an EU institution. See also euro area, European System of Central Banks (ESCB), Eurosystem, national central bank (NCB)

The EU institution established in 1967 (for the then three European Communities) that drafts proposals for new EU legislation (which it presents to the European Parliament and the EU Council for adoption), makes sure that EU decisions are properly implemented and supervises the way EU funds are spent. Together with the Court of Justice of the European Union, it ensures that legislation applying to all EU Member States is properly implemented and that the provisions of the TFEU are applied in full. See also Court of Justice of the European Union (CJEU)

Harmonised surveys of business and consumer opinion conducted on behalf of the European Commission in each of the EU Member States. Questions are addressed to managers in manufacturing, construction, retail and services industries as well as to consumers. From each monthly European Commission survey, composite indicators are calculated that summarise the replies to a number of different questions in a single indicator (confidence indicators).

An EU institution that brings together the Heads of State or Government of the EU Member States, the President of the European Council and the President of the European Commission to provide the European Union with the necessary impetus for its development and to define the general political guidelines thereof. See also Council of the European Union (EU Council)

Prior to Stage Three of EMU, the ECU was a basket currency made up of the sum of fixed amounts of 12 out of the then 15 currencies of the EU Member States. The value of the ECU was calculated as a weighted average of the value of its component currencies. The ECU was replaced by the euro on a one-for-one basis on 1 January 1999.

A free-trade area encompassing EU Member States and Iceland, Liechtenstein and Norway.

An EU facility, based on Article 122(2) of the Treaty, that allows the Commission to raise up to €60 billion on behalf of the EU for lending to EU Member States experiencing, or being threatened with, exceptional circumstances beyond their control. EFSM lending is subject to strong conditionality in the context of joint EU-IMF programmes. See also European Stability Mechanism (ESM)

A limited liability company established by the euro area countries, on an intergovernmental basis, for the purpose of providing loans to euro area countries in financial difficulties. See also European Stability Mechanism (ESM)

A temporary EU body established on 1 January 1994 to strengthen central bank cooperation and monetary policy coordination in Stage Two of Economic and Monetary Union (EMU) and to carry out the preparations required for the establishment of the European System of Central Banks (ESCB), for the conduct of the single monetary policy and for the introduction of a single currency in Stage Three. It was replaced by the ECB on 1 June 1998.

An exchange rate regime established in 1979 to foster closer monetary policy cooperation between the central banks of the Member States of the European Economic Community (EEC) so as to lead to a zone of monetary stability in Europe. The main components of the EMS were the ECU (a basket currency made up of the sum of fixed amounts of currencies of EEC Member States), the exchange rate and intervention mechanism (ERM) and various credit mechanisms. It was replaced by ERM II (exchange rate mechanism II) at the start of Stage Three of Economic and Monetary Union (EMU) on 1 January 1999. See also European Currency Unit (ECU), exchange rate mechanism II (ERM II)

An EU institution that currently consists of 705 directly elected representatives of the citizens of the Member States. It plays a role in the EU's legislative process, although with differing prerogatives that depend on the procedures through which the respective EU legislation is to be enacted. Where monetary policy and the ESCB are concerned, the powers of the European Parliament are mainly consultative in character, although the TFEU provides for certain procedures with respect to the democratic accountability of the ECB vis-à-vis the Parliament (presentation of the ECB's Annual Report, including a general debate on monetary policy, and hearings before the competent parliamentary committees).

An intergovernmental organisation established by the euro area countries on the basis of the Treaty establishing the European Stability Mechanism. It is a permanent crisis management mechanism for the euro area which issues debt instruments in order to finance loans and other forms of financial assistance to euro area countries. The ESM entered into force on 8 October 2012 and replaced both the European Financial Stability Facility and the European Financial Stabilisation Mechanism. ESM lending is subject to strict conditionality.

The predecessor to the European System of Accounts 2010 (ESA 2010). The ESA 95 was the EU’s version of the internationally used System of National Accounts 1993 (SNA 93), the predecessor to the 2008 SNA.

An internationally compatible accounting framework for a systematic and detailed description of a total economy (that is, a region, country or group of countries), its components and its relations with other total economies. The ESA 2010 sets common standards, definitions, classifications and accounting rules for compiling accounts and tables on a comparable basis in the European Union. It also sets out the time limits by which EU Member States must transmit their accounts and tables, to be compiled in accordance with the ESA 2010 methodology, to the European Commission (Eurostat). The ESA 2010, implementation of which began in accordance with Regulation (EU) No 549/2013 of the European Parliament and of the Council in September 2014, replaced the previous European System of Accounts 1995 (the ESA 95) and is the EU's current version of the internationally used System of National Accounts 2008 (2008 SNA).

The central banking system of the European Union. It comprises the ECB and the national central banks of all EU Member States (but the national central banks of EU Member States whose currency is not the euro are not involved in the conduct of the Eurosystem's monetary policy for the euro area because they retain responsibility for monetary policy under national law). See also euro area, European Central Bank (ECB), Eurosystem, national central bank (NCB)

The group of institutions in charge of ensuring the supervision of the EU’s financial system. It comprises the European Systemic Risk Board, the three European Supervisory Authorities (the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority), the Joint Committee of the European Supervisory Authorities, and the national supervisory authorities of the EU Member States.

An independent EU body responsible for the macro-prudential oversight of the financial system within the EU. It contributes to the prevention or mitigation of systemic risks to financial stability that arise from developments within the financial system, taking into account macroeconomic developments, so as to avoid periods of widespread financial distress.

See euro short-term rate (€STR)

The Statistical Office of the European Union. It is part of the European Commission and responsible for the production of Union statistics.

The central banking system of the euro area. It comprises the ECB and the national central banks of those EU Member States whose currency is the euro. See also euro area, European Central Bank (ECB), European System of Central Banks (ESCB), national central bank (NCB)

Any day on which the ECB and at least one national central bank are open for the purpose of conducting Eurosystem monetary policy operations.

The results of exercises conducted by Eurosystem staff to project possible future macroeconomic developments in the euro area as part of the economic analysis.

Surveys of business conditions in manufacturing and in services industries that are conducted for a number of countries in the euro area and used to compile indices. The Eurozone Manufacturing Purchasing Managers’ Index (PMI) is a weighted indicator calculated from indices of output, new orders, employment, suppliers’ delivery times and stocks of purchases. The service sector survey asks questions on business activity, expectations of future business activity, the amount of business outstanding, incoming new business, employment, input prices and prices charged. The Eurozone Composite Index is calculated combining the results from the manufacturing and services sector surveys.

economic value of equity

The provision set out in Article 126 TFEU and specified in Protocol No 12 on the excessive deficit procedure requires EU Member States to maintain budgetary discipline, defines the criteria for a budgetary position to be considered an excessive deficit and regulates steps to be taken following the observation that the requirements for the budgetary balance or government debt have not been fulfilled. This is supplemented by an EU Council Regulation on speeding up and clarifying the implementation of the excessive deficit procedure, which is one element of the Stability and Growth Pact.

Refers to the corrective arm of the macroeconomic imbalance procedure, which is initiated when excessive macroeconomic imbalances are identified in an EU Member State, including imbalances that jeopardise the proper functioning of Economic and Monetary Union. The procedure includes issuing policy recommendations, the preparation of a corrective action plan by the Member State concerned, enhanced surveillance and monitoring requirements and, in respect of EU Member States whose currency is the euro, the possibility of financial sanctions in the event of a failure to take corrective action. See also Economic and Monetary Union (EMU)

The exchange rate arrangement established on 1 January 1999 that provides a framework for exchange rate policy cooperation between the Eurosystem and EU Member States whose currency is not the euro. Although membership in ERM II is voluntary, Member States with a derogation are expected to join. This involves establishing both a central rate for their respective currency's exchange rate against the euro and a band for its fluctuation around that central rate. The standard fluctuation band is ±15%, but a narrower band may be agreed on request. Foreign exchange intervention and financing at the margins of the standard or narrower fluctuation bands are, in principle, automatic and unlimited, with very short-term financing available. However, the ECB and the non-euro area national central banks participating in ERM II could suspend automatic intervention if such intervention were to conflict with their primary objective of maintaining price stability.

A monetary policy strategy aiming for a given (usually a stable or even fixed) exchange rate against another currency or group of currencies.

A measure of the variability of exchange rates, usually calculated on the basis of the annualised standard deviation of daily percentage changes.

A general term referring to systems which simultaneously exchange the two assets involved in a foreign exchange transaction or a securities transaction. See also delivery versus delivery, delivery versus payment, payment versus payment

One of the decision-making bodies of the ECB. It comprises the President and the Vice-President of the ECB and four other members, all of whom are appointed by common accord by the Heads of State or Government of the EU Member States whose currency is the euro. See also General Council of the ECB, Governing Council

The cut-off point below which respondents are not required to report the data required.

Criteria determining whether an existing participant in a system should cease participation or not. The participant’s exit may be voluntary, or it may be compulsory (e.g. following the opening of insolvency proceedings).

A subset of data collected and compiled by the ECB, the quality of which is somewhat poorer than that of other ECB statistics, but sufficiently reliable for policy analysis and other purposes. They include data that are insufficiently harmonised, of incomplete coverage, sub-optimal in terms of statistical concepts and methodologies and/or based on estimation techniques.

The loss that would be incurred if a certain risk materialised. See also bilateral exposure

Statistics comprising the euro area b.o.p. (transactions), the euro area i.i.p. (outstanding positions) and the Eurosystem's template on international reserves and foreign currency liquidity.

Exports and imports of goods with countries outside the euro area, measured in terms of value and as indices of volume and unit value. External trade statistics are not comparable with the exports and imports recorded in the national accounts, as the latter include both intra-euro area and extra-euro area transactions, and also combine goods and services. Nor are they fully comparable with the goods item in b.o.p. statistics.

The exchange of (i.e. trade in) goods and services between euro area countries and other countries.