ECB glossary

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S

securitisation
The pooling of financial assets, such as residential mortgage loans, and their subsequent sale to a special-purpose vehicle, which then issues fixed income securities for sale to investors. The principal and interest of these securities depend on the cash flows produced by the pool of underlying financial assets.
SGP
See
Stability and Growth Pact (SGP)
significant supervised entity
A supervised entity that fulfils certain criteria regarding size, importance for the economy of the EU or any participating Member State or significance of its cross-border activities. All other supervised entities have to be considered less significant supervised entities. See also
Single Supervisory Mechanism (SSM)
supervised entity
Single Resolution Mechanism (SRM)
A mechanism proposed by the European Commission, which establishes uniform rules and a uniform procedure for the resolution of credit institutions established in the banking union. It is envisaged that it will be composed of a single resolution board and national resolution authorities in participating Member States, with ultimate decision-making power at the European level. For the purposes of resolution, the SRM will have at its disposal a single resolution fund. The SRM is a necessary complement to the Single Supervisory Mechanism in order to achieve a well-functioning banking union. See also
Single Supervisory Mechanism (SSM)
Single Supervisory Mechanism (SSM)
A mechanism composed of the ECB and national competent authorities in participating Member States for the exercise of the supervisory tasks conferred upon the ECB. The ECB is responsible for the effective and consistent functioning of this mechanism, which forms part of the banking union.
six-pack
Five regulations and one directive that entered into force on 13 December 2011 to strengthen the Stability and Growth Pact. The four fiscally-related legislative acts are aimed at strengthening budgetary surveillance and coordination of economic policies, speeding up and clarifying the implementation of the excessive deficit procedure, and ensuring the effective enforcement of budgetary surveillance in the euro area and the requirements for the fiscal frameworks of the Member States. The two macroeconomic-related legislative acts are aimed at preventing and correcting macroeconomic imbalances and at allowing enforcement action to correct excessive macroeconomic imbalances in the euro area. See also
excessive deficit procedure (EDP)
SREP
See
Supervisory Review and Evaluation Process (SREP)
SRM
See
Single Resolution Mechanism (SRM)
SSM
See
Single Supervisory Mechanism (SSM)
Stability and Growth Pact (SGP)
The Stability and Growth Pact consists of two EU Council Regulations, on "the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies" and on "speeding up and clarifying the implementation of the excessive deficit procedure", and of a European Council Resolution on the Stability and Growth Pact adopted at the Amsterdam summit on 17 June 1997. More specifically, budgetary positions close to balance or in surplus are required as the medium-term objective for Member States since this would allow them to deal with normal cyclical fluctuations while keeping their government deficit below the reference value of 3% of GDP. In accordance with the Stability and Growth Pact, countries participating in EMU will submit annual stability programmes, while non-participating countries will continue to provide annual convergence programmes.
stability programmes
These are medium-term government plans and assumptions provided by euro area countries regarding the development of key economic variables with a view to the achievement of the medium-term objective of a budgetary position close to balance or in surplus as referred to in the Stability and Growth Pact. These programmes present measures for the consolidation of fiscal balances as well as the underlying economic scenarios. Stability programmes must be updated annually. They are examined by the European Commission and the Economic and Financial Committee (EFC). Their reports serve as the basis for an assessment by the ECOFIN Council, focusing in particular on whether the medium-term budgetary objective in the programme is in line with a budgetary position close to balance or in surplus, providing for an adequate safety margin to ensure that an excessive deficit is avoided. Countries whose currency is not the euro must submit annual convergence programmes, in accordance with the Stability and Growth Pact. See also
Council of the European Union (EU Council)
Economic and Financial Committee (EFC)
Stability and Growth Pact (SGP)
Stage One
See
Economic and Monetary Union (EMU)
Stage Three
See
Economic and Monetary Union (EMU)
Stage Two
See
Economic and Monetary Union (EMU)
standing facility
A central bank credit facility available to counterparties at their own initiative. The Eurosystem offers two overnight standing facilities: the marginal lending facility and the deposit facility. See also
deposit facility
marginal lending facility
straight line depreciation/amortisation
Depreciation/amortisation over a given period is determined by dividing the cost of the asset, less its estimated residual value, by the estimated useful life of the asset pro rata temporis.
supervised entity
Any of the following: (a) a credit institution established in a participating Member State; (b) a financial holding company established in a participating Member State; (c) a mixed financial holding company established in a participating Member State, provided that it fulfils the conditions laid down in point (21)(b); (d) a branch established in a participating Member State by a credit institution which is established in a non-participating Member State. See also
significant supervised entity
Single Supervisory Mechanism (SSM)
Supervisory Board
An internal body of the ECB that undertakes the planning and execution of the tasks conferred on the ECB relating to the prudential supervision of credit institutions. The Supervisory Board is composed of a Chair, a Vice-Chair, four representatives of the ECB and one representative of the national competent authority in each participating Member State of the Single Supervisory Mechanism. See also
Single Supervisory Mechanism (SSM)
Supervisory Review and Evaluation Process (SREP)
The process developed within the Single Supervisory Mechanism that is used to guide the supervisory review of significant and less significant credit institutions and determine whether possible additional requirements with respect to specific additional own funds, disclosure or liquidity, or other measures, should be imposed on the supervised entity. See also
Single Supervisory Mechanism (SSM)