English

Transactions, especially those conducted by hedge funds, in which such highly creditworthy securities or derivatives are purchased whose credit risk appears to be overvalued in the market. The maturity risk is hedged by buying…

As part of market risk, the interest rate premium that must be granted for certain credit quality classes compared with the risk-free interest rate, e.g. for government bonds rated very highly by rating agencies…

In the ECB’s statistics, a broadly defined aggregate. It includes – loans on book entry, – purchases of debt securities (financing provided through purchases of debt securities) and – shares and other equity issued…

Generally, groups of people who pool their saved money and lend it on favorable terms to members seeking credit. The business is run by elected cooperatives, often on a part-time basis (as a second…

Unless otherwise defined, this refers to the total of all loans granted in – an economy, – a currency area or – the world as a whole at a given point in time. –…

A wave of bankruptcies – in one industry – gives banks a lot of bad loans (bad debts) or stock prices suddenly fall very sharply, so that the banks’ credit collateral is worth less.…

Special type of credit derivative. These are bonds issued by the protection buyer (floating rate payer; usually by a special purpose vehicle – also known as special purpose vehicle [SVP] and conduit [conduit]), but…

A revolving credit without maturity. – See user fee. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol.,…

A loan granted by a bank which it retains on its books; in other words, it may not assign or securitize the claim. In principle, an institution is entitled to assign a claim (assignment…

An agreement between the creditor and debtor permitting the borrower to draw down funds up to a quantified maximum for a stated period of time. – See user fee, credit, evergreen. Attention: The financial…

In the language of the ECB, the temporary provision of liquidity against special collateral, primarily in the form of securities; sometimes also referred to as credit secured by securities. – In the case of…

One who grants a loan to a debtor without security (a creditor who does not benefit of any security on any specific asset given as collateral). Attention: The financial encyclopedia is protected by copyright…

Subordinated liabilities include all debts that, in the event of insolvency, will only be serviced after all creditors have been satisfied. – In principle, there is a special incentive for risk monitoring of a…

Loans granted by producers and/or distributors of electricity and gas, as well as wind power operators, to customers to enable them to procure the necessary technical equipment, such as heating systems and connections to…

In general, the good reputation, the all-round standing, the positive image that an economic entity – private household, company, also: a state – enjoys in the business sphere. – Creditworthiness, the borrowing power of…

The confidence of investors that a state will service the bonds it has issued and thus the ability to place further corresponding securities on the market. If this confidence is lost, the government’s securities…

The confidence of investors that a state will service the bonds it has issued and thus the ability to place further corresponding securities on the market. If this confidence is lost, the government’s securities…

In general, the risk of default or even insolvency of a debtor. – The risk that securities in the portfolio will be downgraded (plutoed) after purchase and that this will directly or indirectly disadvantage…

The (currently still existing) possibility to build up an already considerable position in a stock corporation without being subject to a notification obligation by – purchasing up to 2.99 percent (from 3 percent there…

In the economic sense – generally a difficult condition with stagnation of sales in a sub-market or in the national economy as a whole. – The period of time during which an exceptional, prolonged…

An agreement, made in advance and known to all parties, on how to share losses incurred in the event of a financial crisis. Advocated by some as a measure of prudent, forward-looking policy, rejected…

The view that central bank policy could be the cause of or reason for a crisis. In particular, it refers to the central bank’s high or low interest rate policy. However, there is not…

Experience shows that a crisis is indicated on the financial market as a whole by noticeable financial euphoria and corresponding expectations. In detail, one can observe a number of regularly occurring circumstances, namely –…

Proposal from academia whereby the central bank offers banks a specific type of paper for purchase in return for a fee in profitable times. In times of crisis, the paper can then be exchanged…

Body to be set up for each country at the suggestion of the Financial Stability Council, comprising supervisory authorities, the central bank and the ministry of finance. The main task of a CMG is…

A term that emerged in 2007 in connection with the subprime crisis. – In the USA, a considerable number of mortgage loans (covenant-light credits) granted to homeowners with a low credit rating (sub-prime addresses)…

In the event of a crisis, the best way to implement drastic changes in the financial market – and this also applies to other areas – is through legislation and/or administration. In other words,…

The threat of – severe disruption or – even collapse of regular exchange relations within an economy or the world economy as a whole (extremely severe and widespread troubles that affect the whole financial…

Unless otherwise defined, the criterion of constancy means that the government’s economic policy follows a reliable, predictable course. This is also widely regarded as a condition for a proper, planned monetary policy. The pioneering…

On July 1, 2013, Croatia became the 28th member state of the EU, but not – as has been repeatedly misinterpreted – into the euro area. However, because a good 90 percent of the…

Abbreviation for Cash Return On Capital Invested. Used by stock analysts as a measure of the return generated by a company on its total invested capital. – By comparing the CROCI with the company’s…

In the jargon of institutes – and of an entity in general – the term – for an unpleasant superior and – in particular – for a know-all of higher hierarchical position from corporate…

Protection of primary agricultural producers against crop failures due to natural disasters, such as floods, hail, and drought. In some countries, such full or partial insurance is compulsory for the farm concerned; in others,…

Loans granted or guaranteed by government agencies to farms to ensure the purchase of seed and auxiliary materials to achieve the largest possible harvest. In Europe, such assistance was especially common after World War…

The calculated exchange rate that can be derived from the concatenation of two other exchange rates. As a rule, cross rates are calculated using the USD. For example, the EUR/GBP or GBP/EUR ratio can…

A transaction where the buy broker and the sell broker are the same person, i.e. two orders are executed by the same broker against each other or both belong to the same company. Corresponding…

The bank is entitled to terminate the loan – i.e., to call in the loan granted (immediate repayment of the loan granted) – if the debtor defaults on another obligation to the same bank.…

A financial services provider domiciled abroad that does not have a branch in Germany approaches customers in the domestic market – purposefully via the Internet or – through domestic intermediaries. – The German Federal…

The bank is entitled to terminate the loan – namely, to repay the loan (the act of paying back money borrowed earlier from the bank) – if the debtor defaults on an obligation to…

Body established at the European Commission in 2001 (the chairs of the respective secretariats) with the aim of exchanging information between committees dealing with special issues. – See Agreements on the Exchange of Information.…

The opportunity to leverage an existing customer relationship of a bank for other providers – primarily building societies, insurance companies, and travel agents). – See branding, cobranding card, concession store, deliverables, cash card, gigabank,…

In a group of companies (corporate group), the central management compensates for the losses of a group company from the profits of other companies. – This is harmful from an economic point of view,…

The special assets (fund) managed by a capital management company are held in public and private securities according to a certain mixing ratio (a fund that invests both in public stocks and private equity).…

The raising of money to finance investments of any kind – but especially the creation of new products and the realization of other extraordinary market activities – from a very large number of small…

Unless otherwise defined, crowding-out refers to the fact that the government absorbs supply on the financial market by offering better conditions – especially higher interest rates and, as a rule, better credit ratings –…

Certificate based on the price of crude oil. Often based on a fluctuation range of the oil price. The issuer of the certificate pays a bonus, for example, if the price remains within a…

Because of its very strong impact on the cost-of-living price index (in the Harmonized Index of Consumer Prices [HICP], it accounts for just under 10 percent), the price of crude oil is watched particularly…

The public and, above all, the trade unions repeatedly call for higher wages when the cost of living has risen for the car-driving masses as a result of higher gasoline prices. – The increase…

On the commodity exchange, the purchase of soybean futures and the simultaneous sale of soybean meal and soybean oil futures to establish a processing margin). – See replacement hedge, futures markets, commodity futures contract,…

Formerly often said of coins of smaller denomination. – Money denominations after a larger amount, which are after the decimal point; in the EMU today cents). – In both meanings, the term probably derives…

An asset is sold but repurchased at a later date, often on the same day. Such a transaction occurs for accounting policy and often also for tax policy considerations (a routine method used to…

The use of money or contributions in kind – in the case of banks, mainly the provision of premises – by a company with the aim of supporting artistic creation of every kind. In…

Unless otherwise defined, in stock exchange parlance, a security with an interest coupon, dividend coupon or other subscription rights attached to the security. If these are missing, the term ex (ex) is used. In…

On stock exchanges, the totality of securities traders (also known as unofficial dealers and backdrops) who professionally conclude transactions in the open market for their own account or on behalf of clients. – In…

Another term for foreign exchange, hence all means of payment in the hands of non-residents. – In a narrower sense, only foreign banknotes and coins. Attention: The financial encyclopedia is protected by copyright and…

Another term for foreign exchange, hence all means of payment in the hands of non-residents. – In a narrower sense, only foreign banknotes and coins. Attention: The financial encyclopedia is protected by copyright and…

an area in which banknotes and coins issued by a single central bank are legal tender; another name for currency area. – See secondary currency. – Cf. ECB Monthly Report, October 2007, p. 113…

A provision in contracts that specifies the relationship between a company’s own currency and one or more foreign currencies. This is intended to exclude the risk, which experience has shown to be not insignificant,…

A provision in contracts that specifies the relationship between a company’s own currency and one or more foreign currencies. This is intended to exclude the risk, which experience has shown to be not insignificant,…

The rampant export of goods solely due to the fact that the currency of the exporting country is very cheap to buy; and consequently, the goods and services from that country are offered at…

The rampant export of goods solely due to the fact that the currency of the exporting country is very cheap to buy; and consequently, the goods and services from that country are offered at…

Devisen-Future): Forward tradable contracts in foreign currency. – See carry trades, feedback trading, success rate. – Cf. Deutsche Bundesbank Monthly Report, February 2007, pp. 32 f. (presentation of the relevant forward contracts; reference to…

All banknotes and coins in circulation that are used as legal tender. At the ECB, this is more precisely the banknotes issued by the Eurosystem plus the coins issued by the Eurosystem and central…

The unlawful, culpable act of violating regulations – which are usually very extensive and go into great detail – in connection with the compulsory exchange economy. Corresponding offenses (against “pests of the people” in…

A large-scale and sudden exchange of one currency (e.g. EUR) for another (e.g. USD or INR). It is triggered by corresponding expectations on the international financial markets; in the case of the EUR, above…

Until about 1900, leading economists demanded that a central bank may only put into circulation as much means of payment as its stock of precious metals. This rules out the possibility of adjusting the…

Investors noticeably withdraw money from a weak currency and park it in a strong currency. – Before entry into the European Monetary Union, periods of USD weakness were regularly associated with shifts in favor…

Roughly speaking, a country consumes more than it produces; more money is spent than is available, and this imbalance is compensated for by external capital inflows. Current account deficits over a period of several…

In the case of financial products with income and/or expenses in future periods – such as an insurance contract – this refers to the determination of the present value (discounted value). – Contractually agreed…

In the case of financial products with income and/or expenses in future periods – such as an insurance contract – this refers to the determination of the present value (discounted value). – Contractually agreed…

The Current Ratio is a liquidity ratio that measures a company’s ability to pay off its short-term liabilities with its short-term assets. The higher the Current Ratio, the more capable the company is of…

In relation to a bank and generally to a company, measures taken with the aim of divesting less profitable business areas in order to ultimately improve the financial situation (an action done by a…

An institution that holds and manages securities and other assets on behalf of a third party (a bank, financial institution or other entity that has the responsibility to manage the custody or other safekeeping…

The possibility of loss of assets placed in custody due to adverse circumstances at the custodian, such as insolvency, carelessness, misuse, fraud, poor administration or inadequate record-keeping (the risk of a loss being incurred…

In general, anyone who orders a good from a supplier with the intention of taking delivery of the corresponding good or service now or later in return for payment. The word is derived from…

Customer Acquisition Cost (CAC) is a business metric that indicates the total cost of acquiring a new customer. This includes the costs of all marketing and sales activities, and any other expenses related to…

In the case of a bank, the provision of advice to account-holders in general and in the case of investments in particular. The supervisory authorities require that conflicts of interests between customers and the…

Card where the issuer is also the provider of the service. In Germany, they are issued mainly by department stores and can only be used there. As a rule, these cards offer special benefits,…

Card issued by several issuers in complementary areas of consumption, usually also bundling various functions – for example, discounts, granting of credit. In this way, it is possible to incorporate the services of several…

Employee in an institution with the sole task of keeping in touch with individual customers (a financial institution employee who goes out to keep contact with current customers in order to strengthen their affiliation…

The customer churn rate, also known as the customer attrition rate, is a business metric that calculates the number of customers who leave a product over a given period of time, divided by the…

In the jargon of institutes, unfriendly term for – all employees entrusted with customer care and – the call center – See canvassing, gatekeeper, hotliner, infighting, cheesemaker, customer care worker, profiling, rainmaker, seat heater,…

A bank’s record of lending to a customer, of the customer’s financial circumstances, of the customer’s payment record, and of other information relevant to the bank’s dealings with the customer (a record of an…

At a bank, the endeavor to act in all respects in such a way that the customer’s best interests come first, and that therefore, in cases of doubt, the customer’s advantage is placed above…

A loan granted by a company – i.e. not by a bank – to a customer. It is used by the company granting the loan to secure sales and/or to influence the management of…

In relation to institutions, the establishment and maintenance of a bond of trust between the bank and the customer. – From around 1990, this was attempted in many cases by (large) banks worldwide by…

A term frequently used in the world of finance, but one that is difficult to define precisely. Geographically: how far is the customer from the nearest branch or ATM? – personally: does the customer…

In the financial sector, the advice given by a provider’s customer to others to enter into a business relationship with the singled-out business partner. – As in other sectors, customer recommendations are also the…

Tailoring of a bank’s services to the specific needs of the customer. – See churn rate, bank customer profile, authority management, banking, container banking, divergence, fact sheet, customer retention, customer centricity, McDonaldization, prosumer, scoring.…

Statistical principle within the ECB according to which central banks may limit themselves to the most important banks when collecting data. However, ninety-five percent of the industry – measured by total assets – must…