Monetary policy glossary

The convention regulating the number of days included in the calculation of interest on credits. The Eurosystem applies the day-count convention actual/360 in its monetary policy operations.

The market in which the debt instruments are issued and traded. Securitised debt has to be repaid by the issuer at maturity. See also debt security, equity, equity market

The subject of one of the fiscal criteria used to define the existence of an excessive deficit, as laid down in Article 126(2) TFEU. It is defined as the ratio of government debt to gross domestic product at current market prices, while government debt is defined in Protocol No 12 (on the excessive deficit procedure) as the total gross debt at nominal value outstanding at the end of the year and consolidated between and within the sectors of general government.

A negotiable financial instrument serving as evidence of a promise on the part of the issuer (the borrower) to make one or more payment(s) to the holder (the lender) on a specified future date or dates. Such securities usually carry a specific rate of interest (the coupon) and/or are sold at a discount to the amount that will be repaid at maturity. Debt securities issued with an original maturity of more than one year are classified as long-term. Money market paper and, in principle, private placements are included in the debt securities statistics of the ECB.

The subject of one of the fiscal criteria used to define the existence of an excessive deficit, as laid down in Article 126(2) TFEU. It is defined as the ratio of the planned or actual government deficit to gross domestic product at current market prices. The government deficit is defined in Protocol No 12 (on the excessive deficit procedure) as net borrowing of the general government.

The difference between the general government budget balance (government deficit or surplus) and the change in general government debt. Such adjustments may stem from, among other things, changes in the amount of financial assets held by the government, revaluations or statistical adjustments. See also general government

A decline in the general price level, e.g. in the consumer price index. See also inflation

A measure of the extent to which an economy depends on trade with other countries or regions, e.g. the ratio of the sum of total imports and exports to GDP.

The elimination of physical certificates or documents of title indicating ownership of financial assets, such that the financial assets exist only as accounting records.

A standing facility of the Eurosystem which counterparties may use to make overnight deposits at a national central bank. Such deposits are remunerated at a pre-specified interest rate. See also standing facility

The interest rate paid on the surplus liquidity that credit institutions may deposit overnight in an account with a national central bank that is part of the Eurosystem.

Savings deposits for which the holder must respect a fixed period of notice before withdrawing the funds. In some cases there is the possibility of withdrawing on demand a certain fixed amount in a specified period or of early withdrawal subject to the payment of a penalty. Deposits redeemable at a period of notice of up to three months are included in M2 (and hence in M3), while those with a longer period of notice are part of the (non-monetary) longer-term financial liabilities of the MFI sector.

Mainly time deposits with a given maturity that, depending on national practices, may be subject to the payment of a penalty in the event of early withdrawal. Some non-marketable debt instruments, such as non-transferable (retail) certificates of deposit, are also included. Deposits with an agreed maturity of up to two years are included in M2 (and hence in M3), while those with an agreed maturity of over two years are included in the (non-monetary) longer-term financial liabilities of the MFI sector.

deposit facility rate

Changes in the budget balance caused by government policy measures rather than by the automatic reaction of government revenue and expenditure to economic fluctuations. See also automatic fiscal stabilisers, fiscal policy stance (fiscal stance)

See single rate auction (Dutch auction)