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Cost, insurance and freight at the importer’s border

cap (limit)

A quantitative limit on the funds or securities transfer activity of a participant in a system. Limits may be set by each individual participant or imposed by the entity managing the system. Limits can be placed on system participants’ net debit and/or net credit positions.


cyclically adjusted price/earnings (ratio)

capital account (in a b.o.p. context)

An account in the balance of payments showing (a) capital transfers receivable and payable between residents and non-residents, and (b) the acquisition and disposal of non-produced, non-financial assets between residents and non-residents.

capital accounts

Part of the system of national (or euro area) accounts consisting of the change in the net worth that is due to net saving, net capital transfers and net acquisitions of non-financial assets.

capital adequacy statement (CAS)

A formal statement from the management body providing its assessment of the capital adequacy of the institution and explaining its main supporting arguments.

capital conservation buffer (CCoB)

A capital buffer of up to 2.5% of a bank’s total exposures to avoid breaches of minimum capital requirements during periods of stress when losses are incurred. The capital buffer has been implemented in Europe via Article 129 CRD IV and must be met with CET1 capital.

Capital Requirements Regulation / Capital Requirements Directive (CRR/CRD IV)

Capital Requirements Regulation and Directive: Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (CRR) and Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (CRD IV). The CRR/CRD IV package transposes the global standards on bank capital (the Basel III agreement) into EU law.


capital asset pricing model

card acquirer

See acquirer (card acquirer)

card issuer

A financial institution that makes payment cards available to cardholders, authorises transactions at point-of-sale (POS) terminals or automated teller machines (ATMs) and guarantees payment to the acquirer for transactions that are in conformity with the rules of the relevant scheme.

card with a cash function

A card enabling the cardholder to withdraw cash from a cash dispenser and/or deposit cash. The cash function is usually combined with a payment function. See also cash card

card with a credit function

See credit card (card with a credit function)

card with a debit function

See debit card (card with a debit function)


A person to whom a payment card is issued and who is authorised to use that card.


See capital adequacy statement (CAS)


Banknotes and coins.

cash advance at POS terminal

See cashback (cash advance at POS terminal)

cash card

A card which has only a cash function. See also card with a cash function

cash dispenser

An electromechanical device that permits authorised users to withdraw banknotes, typically using machine-readable plastic cards. See also automated teller machine (ATM)

cash placement

A procedure initiated by an end user of an electronic payment instrument scheme/arrangement to place cash on a user account.

cash settlement agent

The entity whose assets or liabilities are used to settle the payment obligations arising from funds transfer systems or from securities transfers within a central securities depository (CSD). Commercial banks and central banks are typical cash settlement agents.

cash withdrawal

The cash-out of value initiated by an end user via an automated teller machine or following an agreed procedure at a point of acceptance and resulting in the debiting of the same end user’s account.

cash/settlement approach

An accounting approach under which accounting events are recorded at the settlement date.

cashback (cash advance at POS terminal)

A transaction at a POS terminal in which a cardholder asks the retailer to add an amount to the total purchase sum paid for by card or other means in order to receive that amount in cash along with the purchase. See also point-of-sale (POS) terminal


Chicago Board Options Exchange


covered bond purchase programme


See combined buffer requirement (CBR)


See correspondent central banking model (CCBM)


See Collateral Central Bank Management (CCBM2)


See capital conservation buffer (CCoB)


See central counterparty (CCP)


See counterparty credit risk (CCR)


See countercyclical capital buffer (CCyB)


credit default swap

central bank

An institution which - by way of a legal act - has been given responsibility for conducting the monetary policy for a specific area.

central bank credit facility

A standing credit facility which can be drawn upon by certain designated account holders (e.g. banks) at a central bank. The facility can be used automatically at the initiative of the account holder. The loans typically take the form of either advances or overdrafts on an account holder's current account which may be secured by a pledge of securities or by repurchase agreements. See also repurchase agreement

central bank independence

The legal provision which guarantees that a central bank can carry out its tasks and duties without political interference. Article 130 TFEU establishes the principle of central bank independence for the euro area.

central bank money

Liabilities of a central bank, in the form of either banknotes or bank deposits held at a central bank, which can be used for settlement purposes.

central counterparty (CCP)

An entity that interposes itself, in one or more markets, between the counterparties to the contracts traded, becoming the buyer to every seller and the seller to every buyer and thereby guaranteeing the performance of open contracts.

central counterparty (CCP) link

An arrangement between two central counterparties (CCPs) that allows the provision of central counterparty services for trades performed by the participants of those two CCPs, without requiring those participants to become members of both CCPs.

central government

The government as defined in the ESA 2010, but excluding regional and local governments. It includes all administrative departments of the (central) state and other central agencies whose competence extends over the entire economic territory, except for the administration of social security funds. See also general government

central parity

The exchange rate vis-à-vis the euro of currencies of member countries of ERM II, around which the ERM II fluctuation margins are defined. See also exchange rate mechanism II (ERM II)

central rate

The exchange rate of each ERM II member’s currency vis-à-vis the euro, around which the ERM II fluctuation margins are defined. See also exchange rate mechanism II (ERM II)

central securities depository (CSD)

An entity that: 1) enables securities transactions to be processed and settled by book entry; 2) provides custodial services (e.g. the administration of corporate actions and redemptions); and 3) plays an active role in ensuring the integrity of securities issues. Securities can be held in a physical (but immobilised) form or in a dematerialised form (whereby they exist only as electronic records).


Committee of European Securities Regulators


Common Equity Tier 1


Committee on the Global Financial System


Compliance and Governance Office


A method used in certain transfer systems for the processing of orders. This involves altering the sequence in which transfer orders are processed in order to increase the number or value of transfers that can be settled with the available funds and/or securities balances (or the available credit or securities lending lines). See also optimisation routine

charge card

See delayed debit card (charge card)


A written order from one party (the drawer) to another (the drawee; normally a credit institution) requiring the drawee to pay a specified sum on demand to the drawer or a third party specified by the drawer.

chip card (smart card)

A card with an embedded microprocessor (chip) loaded with the information necessary to enable payment transactions.


composite indicator of systemic stress


collective investment undertaking


See Court of Justice of the European Union (CJEU)

clean price

The transaction price excluding any rebate/accrued interest, but including any transaction costs that form part of the price.


The reconciliation and, in some cases, confirmation of transactions prior to settlement, potentially including their netting and the establishment of final positions for settlement. For the clearing of futures and options, this term also refers to the daily balancing of profits and losses and the daily calculation of collateral requirements.

clearing fund

A fund composed of assets contributed by participants in a central counterparty (CCP) or by providers of guarantee arrangements that may be used to meet the obligations of a defaulting CCP participant. In certain circumstances, it may also be used to settle transactions and cover losses and liquidity pressures resulting from such defaults. A clearing fund serves as insurance against unusual price movements not covered by the margin calculation in the event of a member defaulting.

clearing house

A common entity (or a common processing mechanism) through which participants agree to exchange transfer instructions for funds, securities or other instruments. In some cases, a clearing house may act as a central counterparty for those participants, thereby taking on significant financial risks. See also central counterparty

clearing member

A member of a clearing house. See also direct clearing member, general clearing member, non-clearing member

clearing system

A set of rules and procedures whereby financial institutions present and exchange data and/or documents relating to transfers of funds or securities to other financial institutions at a single location (e.g. a clearing house). These procedures often include a mechanism for calculating participants’ mutual positions, potentially on a net basis, with a view to facilitating the settlement of their obligations in a settlement system. See also clearing, clearing house, netting

close link

A situation in which, according to Directive 2006/48/EC “two or more natural or legal persons are linked in any of the following ways: (a) participation in the form of ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking; (b) control; or (c) the fact that both or all are permanently linked to one and the same third person by a control relationship.”

close-out netting

A special form of netting which follows certain contractually agreed events (such as the opening of insolvency proceedings), whereby all existing obligations are accelerated such that they become due immediately. See also default, netting


capital markets union


An arrangement whereby a product or service is associated with more than one brand.


carbon dioxide


Contact Group on Euro Securities Infrastructures


Centralised On-Site Inspections Division


An asset or third-party commitment that is used by a collateral provider to secure an obligation vis-à-vis a collateral taker. See also collateral pool, pledge, repurchase agreement

Collateral Central Bank Management (CCBM2)

A common platform for Eurosystem collateral management, establishing efficient collateral mobilisation and management procedures for both domestic and cross-border collateral.

collateral management

Collateral management includes the process used to control the correspondence between the market value of the relevant collateral and the required value of that collateral. It generally also includes the generation and processing of collateral transfers.

collateral pool

A collateralisation technique that enables an institution to make collateral available to a counterparty without allocating it to a specific transaction. Antonym: earmarking

collection of fixed-term deposits

A monetary policy instrument available to the Eurosystem for fine-tuning purposes. The Eurosystem offers remuneration on counterparties' fixed-term deposits on accounts with the national central banks in order to absorb liquidity from the market.

combined buffer requirement (CBR)

The total Common Equity Tier 1 capital required to meet the requirement for the capital conservation buffer extended by an institution-specific countercyclical capital buffer, a G-SII buffer, an O-SII buffer and a systemic risk buffer, as applicable. It is defined in Article 128 CRD IV.

commercial bank money

Commercial bank liabilities that take the form of deposits held at a commercial bank which can be used for settlement purposes. See also loro account, nostro account

committed facility

A facility (e.g. a credit line or a repo facility) whereby the provider is contractually required to advance funds in specified circumstances. See also collateral pool, loss-sharing agreement

common depository

An entity, usually a credit institution, that provides the two international central securities depositories (ICSDs) with safekeeping and asset servicing for physical papers (“global notes”) covering all or part of an issue of international debt instruments (e.g. Eurobonds). See also specialised depository

common procedures

Procedures which apply to both SIs and LSIs. The common procedures enable the ECB to apply the single European rulebook in a consistent way. Common procedures include: granting a banking licence to a new company or extending an initial licence; authorising an acquisition of a participation in an existing institution; withdrawing a banking licence. See also less significant institution (LSI), significant institution (SI)

compensation of employees

The total remuneration, including gross wages and salaries as well as bonuses, overtime payments and employers’ social security contributions, that is payable, in cash or in kind, by employers to employees in return for work done by the latter during the accounting period (definition according to the ESA 2010).

compensation per employee

The sum total of the compensation of employees divided by the total number of employees.

comprehensive assessment

Financial health checks which the ECB is required to carry out prior to assuming direct supervision over a credit institution. Comprehensive assessments help to ensure that the banks are adequately capitalised and can withstand possible financial shocks. The assessment comprises an asset quality review and a stress test.

confirmation (trade confirmation)

A process whereby the terms of a trade are verified either by directly involved market participants or by a central entity.

consolidated balance sheet of the MFI sector

See consolidated MFI balance sheet

consolidated MFI balance sheet

A balance sheet obtained by netting out inter-MFI positions (e.g. inter-MFI loans and deposits) in the aggregated MFI balance sheet. It provides statistical information on the MFI sector’s assets and liabilities vis-à-vis residents of the euro area not belonging to this sector (i.e. the general government and other euro area residents) and vis-à-vis non-euro area residents. It is the main statistical source for the calculation of monetary aggregates, and it provides the basis for the regular analysis of the counterparts of M3.

consumer credit

Loans granted to households for personal use in the consumption of goods and services.

consumer price index (CPI)

A measure of changes over time in prices of consumption goods and services acquired or used by households.

contactless payment

A payment transaction using a card or other means where the payer and the merchant (and/or their equipment) are at the same physical location and where the communication between the portable device and the point of sale (POS) takes place through contactless technology.

contingent liability

Obligation that arises only upon the realisation of a particular event (e.g. state guarantee).

contractual settlement date accounting

A contractual commitment by a custodian to credit and debit a customer’s cash and securities accounts, as appropriate, on the date on which the customer’s contract with its counterparty is due for settlement (i.e. the contractual settlement date), regardless of whether settlement has actually occurred. Such crediting and debiting is normally provisional and does not become final if settlement does not occur within a time period established by the custodian.

convergence criteria

The four criteria set out in Article 140(1) TFEU that must be fulfilled by each EU Member State before it can adopt the euro, namely a stable price level, sound public finances (a deficit and a level of debt that are both limited in terms of GDP), a stable exchange rate and low and stable long-term interest rates. In addition, each EU Member State must ensure the compatibility of its national legislation, including the statutes of the national central bank, with both the TFEU and the Statute of the European System of Central Banks and of the European Central Bank.

convergence programme

A programme outlining the path towards the achievement of reference values indicated in the Treaty on the Functioning of the European Union, containing medium-term government plans and assumptions regarding the development of key economic variables. Measures to consolidate fiscal balances are also highlighted, together with underlying economic scenarios. Convergence programmes normally cover the following three to four years and are updated annually. They are examined by the European Commission and the Economic and Financial Committee, whose reports serve as the basis for an assessment by the ECOFIN Council. Following the start of Stage Three of Economic and Monetary Union, EU Member States with a derogation continue to submit convergence programmes, whereas countries which are members of the euro area present annual stability programmes, in accordance with the Stability and Growth Pact. See also Stability and Growth Pact (SGP), Treaty on the Functioning of the European Union (TFEU)

Copenhagen criteria (accession criteria)

The criteria defined by the Copenhagen European Council in June 1993 (and confirmed by the Madrid European Council in December 1995) that must be fulfilled by any country wishing to join the European Union. Included are political criteria (stable institutions guaranteeing democracy, the rule of law, human rights and respect for minorities), economic criteria (a functioning market economy) and the incorporation into national law of the acquis communautaire (the EU's body of law).

Core Principles for Systemically Important Payment Systems (CPSIPS)

International standards for systemically important payment systems developed by the G10 central banks in order to guide the oversight activities of central banks with regard to payment systems of systemic importance. For details, see the report “Core Principles for Systemically Important Payment Systems”, BIS, January 2001.


common reporting

corporate action (corporate event)

An action or event decided by the issuer of a security which has an impact on the holders of that security. This may be optional, in which case those holders have a choice (for example, they may have the right to purchase more shares, subject to conditions specified by the issuer). Alternatively, it may be mandatory, whereby those holders have no choice (e.g. in the case of a dividend payment or stock split). Corporate actions can relate to cash payments (e.g. dividends or bonuses) or the registration of rights (subscription rights, partial rights, splits, mergers, etc.).

corporate event

See corporate action (corporate event)

correspondent banking

An arrangement whereby one bank (the settlement or service-providing bank) makes or receives payments (potentially performing other banking services in addition) on behalf of another bank (the customer or user bank). See also loro account, nostro account, tiering arrangement

correspondent central banking model (CCBM)

A mechanism established by the European System of Central Banks with the aim of enabling counterparties to use eligible collateral in a cross-border context. In the CCBM, national central banks act as custodians for one another. This means that each national central bank has a securities account in its securities administration for each of the other national central banks and the ECB.

cost of the external financing of non-financial corporations

The cost incurred by non-financial corporations when taking up new external funds. For euro area non-financial corporations, it is calculated as a weighted average of the cost of bank lending, the cost of debt securities and the cost of equity, based on the amounts outstanding (corrected for valuation effects) and deflated by inflation expectations.

Council of the European Union (EU Council)

An EU institution made up of representatives of the governments of the Member States, normally the ministers responsible for the matters under consideration. The EU Council meeting in the composition of the ministers of economics and finance is often referred to as the "Ecofin Council". See also European Council

countercyclical capital buffer (CCyB)

A capital buffer intended to ensure that credit institutions accumulate sufficient capital during periods of excessive credit growth to be able to absorb losses during periods of stress. It has been implemented in Europe via Article 130, 135-140 CRD IV and it amounts to 0-2.5% of total risk exposure amount and must be met with CET1 capital, but it can be set at a higher level under certain procedures. The buffer is institution-specific and is calculated as a weighted average of the countercyclical buffer rates that apply in the countries where an institution’s credit exposures are located.


The opposite party in a financial transaction (e.g. any party transacting with a central or commercial bank).

counterparty credit risk (CCR)

The risk that, between the time a transaction is agreed and the time it is finally settled, the counterparty to that transaction will default, with the result that a loss is caused when the transaction is closed out or hedged with an outstanding positive transaction value that is not fully covered by collateral.

counterparty risk

The risk that between the time a transaction is agreed and the time it is actually settled, the counterparty to that transaction will fail to fulfil its obligations.

Court of Justice

See Court of Justice of the European Union (CJEU)

Court of Justice of the European Union (CJEU)

The EU institution that rules on the interpretation and application of EU law and reviews the legality of acts of the EU institutions. It consists of the Court of Justice and the General Court.


See consumer price index (CPI)


Committee on Payments and Market Infrastructures


See Core Principles for Systemically Important Payment Systems (CPSIPS)


Capital Requirements Directive


commercial real estate

credit cap

See credit limit (credit cap)

credit card (card with a credit function)

A card that enables cardholders to make purchases and/or withdraw cash up to a prearranged credit limit. The credit granted may be either settled in full by the end of a specified period, or settled in part, with the balance taken as extended credit (on which interest is usually charged).

credit institution

Any institution that is either (i) an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credit for its own account, or (ii) an undertaking or any other legal person, other than those under (i), which issues means of payment in the form of electronic money. See also electronic money

credit limit (credit cap)

A limit on the credit exposure which a payment system participant incurs either vis-à-vis another participant (a “bilateral credit limit”) or vis-à-vis all other participants (a “multilateral credit limit”) as a result of receiving payments which have not yet been settled.

credit line

A commitment, made in advance by a given entity, to grant credit on demand to another entity subject to agreed terms.

credit risk

The risk that a counterparty will not settle the full value of an obligation – neither when it becomes due, nor at any time thereafter. Credit risk includes replacement cost risk and principal risk. It also includes the risk of the settlement bank failing. See also principal risk, replacement cost risk

credit to euro area residents

A broad measure of the financing of non-monetary financial institution (MFI) euro area residents (including general government and the private sector) provided by the MFI sector. It is defined as including MFI loans to euro area residents and MFI holdings of securities issued by euro area residents. The latter include shares, other equity and debt securities. As securities can be seen as an alternative source of funds to loans, and as some loans can be securitised, this definition provides more accurate information on the total amount of financing provided by the MFI sector to the economy than a narrow definition comprising loans only.

credit transfer

A set of procedures enabling a transfer of value by crediting a payee’s user account. This occurs by means of a payment transaction or a series of payment transactions from a payer’s user account carried out by the payment service provider which holds or administers the payer’s user account, based on an instruction given by the payer.

cross-border payment

A payment where the financial institutions of the payer and the payee are located in different countries.

cross-border position

For the purposes of monetary statistics, the stock of financial claims and financial liabilities of MFIs residing in the euro area vis-à-vis MFIs and non-MFIs residing (i) in the euro area, (ii) in non-euro area EU Member States and (iii) in countries outside the EU.

cross-border settlement

Settlement that takes place in a country (or currency area) in which one or both parties to the transaction are not located. Antonym: domestic settlement

cross-currency settlement risk

See foreign exchange settlement risk (cross-currency settlement risk)

cross-currency swap

A contractual agreement with a counterparty to exchange cash flows representing streams of periodic interest payments in two different currencies. See also interest rate swap

cross-margining agreement

An agreement between two central counterparties (CCPs) which makes it possible to limit the margin requirements for institutions participating in both CCPs by regarding the positions and collateral of such participants as one portfolio.

cross-system settlement

The settlement of a payment or securities transaction through a link between two separate payment systems or securities settlement systems.


Capital Requirements Regulation


See Capital Requirements Regulation / Capital Requirements Directive (CRR/CRD IV)


An asset recorded in digital form and enabled by the use of cryptography that is not and does not represent a financial claim on, or a liability of, any identifiable entity.


See central securities depository (CSD)

CSD link

A set of technical and legal arrangements between two central securities depositories (CSDs) for the cross-system transfer of securities. See also direct link, indirect link, investor CSD, issuer CSD, relayed link


corporate sector purchase programme

currency in circulation

Banknotes and coins in circulation that are commonly used to make payments. Currency in circulation as included in M3 is a net concept, meaning that it refers only to banknotes and coins in circulation that are held outside the MFI sector (i.e. currency held by MFIs or "vault cash" has been subtracted). Excluded are central banks' stocks of own banknotes (as they have not been put into circulation) and collector coins (as they are not intended for use in making payments).

current account (in a b.o.p. context)

An account in the balance of payments that covers all transactions in goods, services, primary income and secondary income. See also balance of payments (b.o.p.)

current transfers

Transfers of the general government (e.g. relating to international cooperation), payments of current taxes on income and wealth, and other transfers, such as workers’ remittances, which are not related to capital expenditure; they also include production and import subsidies, social benefits and transfers to EU institutions. See also general government


An entity, often a credit institution, which provides securities custody services to its customers (cf. depository). See also global custodian


The holding and administration, by an entity entrusted with such tasks, of securities and other financial instruments owned by a third party.

custody risk

The risk of a loss being incurred on securities in custody as a result of a custodian’s insolvency, negligence, misuse of assets, fraud, poor administration or inadequate record-keeping. See also custodian, custody

cut-off time

The deadline set by a system (or an agent bank) for the acceptance of transfer orders for a given settlement cycle.


credit valuation adjustment

cyclical component of the budget balance

The effect on the budget balance of the output gap. See also output gap