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Monetary policy glossary

Securities Markets Programme

Interventions by the Eurosystem in public and private debt securities markets in the euro area to ensure depth and liquidity in those market segments that are dysfunctional. The objective is to restore an appropriate monetary policy transmission mechanism, and thus the effective conduct of monetary policy oriented towards price stability in the medium term. The impact of these interventions is sterilised through specific operations to re-absorb the liquidity injected and thereby ensure that the monetary policy stance is not affected.


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.

settlement date

See settlement day (settlement date)

settlement day (settlement date)

The day on which settlement actually takes place.


See Stability and Growth Pact (SGP)

single rate auction (Dutch auction)

An auction in which the allotment interest rate (or price/swap point) applied for all satisfied bids is equal to the marginal interest rate. See also variable rate tender


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)

solvency risk

The risk of loss owing to the failure (bankruptcy) of an issuer of a financial asset or to the insolvency of the counterparty.


See securities settlement system (SSS)

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.

Stage One

See Economic and Monetary Union (EMU)

Stage Three

See Economic and Monetary Union (EMU)

Stage Two

See Economic and Monetary Union (EMU)

standard tender

A tender procedure used by the Eurosystem in its regular open market operations. Standard tenders are carried out within 24 hours. All counterparties fulfilling the general eligibility criteria are entitled to submit bids.

standardised deduction

The fixed percentage of the amount outstanding of debt securities with an agreed maturity of up to two years (including money market paper) which can be deducted from the reserve base by issuers that cannot present evidence that such outstanding amount is held by other institutions subject to the minimum reserve system of the Eurosystem, by the ECB or by a national central bank. See also minimum reserves, reserve base

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

start date

The date on which the first leg of a monetary policy operation is settled. The start date corresponds to the purchase date for operations based on repurchase agreements and foreign exchange swaps.

stock market

See equity market

strip (separate trading of interest and principal)

A zero-coupon bond created in order to trade separately the claims on particular cash flows of a security and the principal of the same instrument.

structural operation

An open market operation executed by the Eurosystem mainly in order to adjust the structural liquidity position of the financial sector vis-à-vis the Eurosystem.


An agreement to exchange future cash flows according to a prearranged formula. See also foreign exchange swap

swap point

The difference between the exchange rate of the forward transaction and the exchange rate of the spot transaction in a foreign exchange swap.

symmetry of the ECB's inflation target

The fact that negative and positive deviations of inflation from the ECB’s target of 2% over the medium term are considered equally undesirable. When interest rates are close to their effective lower bound, maintaining this symmetry requires especially forceful or persistent monetary policy measures to be taken to avoid negative deviations from the inflation target becoming entrenched. This may also imply a transitory period in which inflation is moderately above target. See also effective lower bound (ELB), price stability