One pillar of the European Central Bank’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. 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
Economic and Financial Committee (EFC)
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.
Economic and Monetary Union (EMU)
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 The TFEU no longer refers to the three stages of EMU, as this progressive terminology is outdated.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 effective exchange rate of the euro against the currencies of the nine non-euro area EU Member States and ten of the euro area’s trading partners outside the EU. See also
effective exchange rate (EER) of the euro
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-19 and EER-38). The weights used reflect the share of each partner country in the euro area’s trade in manufactured goods 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 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
Electronic Bill Presentment and Payment (EBPP; electronic invoicing)
Services which enable the electronic transmission, browsing and payment of invoices.
electronic data interchange (EDI)
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).
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.
electronic money institution (ELMI)
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 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).
eligible assets (eligible collateral)
Assets which can be used as collateral in order to obtain credit from the Eurosystem.
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”.
enhanced credit support
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.
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.
equity price risk
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.
The European Union currently has 28 Member States. In addition to the first six Member States of the EEC — Belgium, France, Germany, Italy, Luxembourg and the Netherlands — 22 further countries are now members of the Union. These are: Denmark, Ireland and the United Kingdom (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, Iceland, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and Turkey have the status of candidate countries.
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, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
euro interbank offered rate (EURIBOR)
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 overnight index average (EONIA)
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.
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.
European Banking Authority (EBA)
An EU body whose task as part of the European System of Financial Supervision is to contribute to: improving the functioning of the internal market, including in particular a high, effective and consistent level of regulation and supervision, protecting depositors and investors, ensuring the integrity, efficiency and orderly functioning of financial markets, safeguarding the stability of the financial system, and strengthening international supervisory coordination. See also
European System of Financial Supervision (ESFS)
European Central Bank (ECB)
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 (Court of Justice)
European Commission surveys
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)
European Currency Unit (ECU)
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.
European Economic Area (EEA)
A free-trade area encompassing EU Member States and Iceland, Liechtenstein and Norway.
European Financial Stabilisation Mechanism (EFSM)
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)
European Financial Stability Facility (EFSF)
A limited liability company established by the euro area Member States, on an intergovernmental basis, for the purpose of providing loans to euro area countries in financial difficulties. Such financial assistance is subject to strong conditionality in the context of joint EU-IMF programmes. EFSF loans are financed through the issuance of debt securities, guaranteed up to a total of €440 billion by euro area countries on a pro rata basis. See also
European Stability Mechanism (ESM)
European Monetary Institute (EMI)
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.
European Monetary System (EMS)
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 751 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).
European Stability Mechanism (ESM)
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. It has an effective lending capacity of €500 billion and replaced both the European Financial Stability Facility and the European Financial Stabilisation Mechanism. ESM lending is subject to strict conditionality.
European System of Accounts 1995 (ESA 95)
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.
European System of Accounts 2010 (ESA 2010)
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).
European System of Central Banks (ESCB)
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)
European System of Financial Supervision (ESFS)
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.
European Systemic Risk Board (ESRB)
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.
The Statistical Office of the European Union. It is part of the European Commission and responsible for the production of Union statistics.
Any day on which the ECB and at least one national central bank are open for the purpose of conducting Eurosystem monetary policy operations.
Eurosystem staff projections
The results of exercises conducted by Eurosystem staff to project possible future macroeconomic developments in the euro area as part of the economic analysis.
Eurozone Purchasing Managers’ Surveys
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.
excessive deficit procedure
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.
exchange rate mechanism II (ERM II)
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.
exchange rate targeting
A monetary policy strategy aiming for a given (usually a stable or even fixed) exchange rate against another currency or group of currencies.
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
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.
external trade in goods
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.
extra-euro area trade
The exchange of (i.e. trade in) goods and services between euro area countries and other countries.