Banking supervision glossary

exposure at default

See European Banking Authority (EBA)

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.

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)

European Deposit Insurance Scheme

expected loss best estimate

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.

European Supervisory Authority

See European System of Financial Supervision (ESFS)

See European Stability Mechanism (ESM)

See European Systemic Risk Board (ESRB)

European centralised infrastructure for supervisory data

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 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)

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 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)

economic value of equity