All glossary entries

profit and loss

price/earnings (ratio)

Pillar 2 guidance

peer-to-peer payment

Pillar 2 requirement

A business platform for the processing of euro payment instruments which is made up of governance rules and payment practices and supported by the necessary technical platform(s).

An entity which is identified/recognised by a transfer system and – either directly or indirectly – is allowed to send transfer orders to that system and is capable of receiving transfer orders from it. See also direct participant, indirect participant, remote participant

Procedures concerning the freedom of establishment and the freedom to provide services in other Member States of any credit institution authorised and supervised by the competent authorities of another Member State, provided that such activities are covered by the authorisation (as regulated by Articles 33 to 46 of the CRD IV).

The party to a payment transaction which issues the payment order or agrees to the transfer of funds to the payee.

In a strict sense, a payment is a transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. However, in a technical or statistical sense, it is often used as a synonym for “transfer order”. See also transfer order

A payment instrument, which is based on the rules of a card scheme, used to withdraw or place cash and/or enable a transfer of value at the request of the payer (via the payee) or the payee in respect of an end-user account linked to the card.

A defined degree of protection against losses for end users and/or participating payment service providers as defined in the formal, standardised and common rules of an electronic payment instrument scheme.

A technical integration of several payment services in a merchant platform.

See settlement lag (payment lag)

An instruction sent by a payer or a payee to a payment service provider requesting the execution of a payment transaction.

A natural or legal person providing services (e.g. issuing, acquiring, the authorisation of transactions, the authentication of end users) enabling the transfer of value between end users. This also includes crypto-asset service providers when delivering services relating to digital payment tokens.

A natural or legal person making use of a payment service in the capacity of payer, payee, or both.

This term has two meanings. 1) In some cases, it refers to the set of instruments, banking procedures and interbank funds transfer systems which facilitate the circulation of money in a country or currency area. 2) In most cases, it is used as a synonym for “funds transfer system”. See also funds transfer system

A mechanism which ensures that the final transfer of a payment in one currency occurs if – and only if – the final transfer of a payment in another currency or currencies takes place. See also exchange-for-value settlement system

personal consumption expenditure

probability of default

See pan-European automated clearing house (PE-ACH)

A provision or similar funds set aside by non-financial corporations to pay for their employees' pensions.

The form in which the results of European Commission surveys are usually presented, namely as the difference between the percentage of respondents giving positive and that of those giving negative replies.

A personal and confidential numerical code which the user of a payment instrument may need to use in order to verify his/her identity. In electronic transactions, this is seen as the equivalent of a signature. See also electronic signature

Personalised features provided by a payment service provider to a payment service user for the purposes of authentication.

Settlement of a derivatives transaction through the delivery of the underlying asset in exchange for payment.

See personal identification number (PIN)

The delivery of assets in order to secure the performance of an obligation by one party (the debtor) vis-à-vis another (the secured party). For the secured party, a pledge creates a security interest (a “lien”) in the assets delivered, while ownership of the assets remains with the debtor.

A device allowing the use of payment cards at a physical (not virtual) point of sale. The payment information is captured either manually on paper vouchers or by electronic means. See also EFTPOS terminal

Cross-border transactions and positions involving debt or equity securities, other than those included in direct investment or reserve assets.

Netting of orders in respect of obligations between two or more parties which neither satisfies nor discharges those original individual obligations. Also referred to as “payment netting” in the case of payment orders. Antonym: netting by novation

A coupon on floating rate instruments which is determined on the basis of the values taken by the reference index at a certain date (or dates) during the coupon accrual period.

Money order in which the drawee is a postal institution.

prudential policy index

See purchasing power parity (PPP)

public quantitative disclosure

A coupon on floating rate instruments which is determined on the basis of the values taken by the reference index at a certain date (or dates) before the start of the coupon accrual period.

The difference between the par value of a security and its price when such price is higher than par.

In the field of direct debits, the advance notification provided by the creditor to the debtor as regards: 1) the amount of the next direct debit; and 2) the date of collection.

See market risk (price risk)

The primary objective of the Eurosystem. The Governing Council considers that price stability is best maintained by aiming for 2% inflation over the medium term. The target is symmetric: negative and positive deviations from the target are considered equally undesirable.

The general government sector’s net borrowing or net lending excluding interest payments on consolidated government liabilities.

An item in the current account representing the return that accrues to resident institutional units for their contribution to the production process or for the provision of financial assets and renting natural resources to non-resident institutional units. See also institutional unit

The place where systems operators locate the infrastructure and/or staff necessary to run their normal daily business operations.

An entity that acts on its own behalf, with its own funds and at its own risk.

The face value of a bond or original amount for which it is issued, i.e. excluding interest payable.

The risk that the seller of a financial asset (e.g. securities or currency) will deliver, but not receive payment, or the risk that the buyer will pay, but not receive delivery. In such a situation, the full value of the securities or funds transferred is at risk. See also delivery versus payment, payment versus payment

Annual transactions on debt securities issued and loans taken out by non-financial corporations and households (including non-profit institutions serving households). The private sector credit flow-to-GDP ratio is defined as the ratio of private sector credit flow to GDP at current market prices.

Outstanding amounts at the end of the year of securities issued and loans taken out by non-financial corporations and households (including non-profit institutions serving households). The private sector debt-to-GDP ratio is defined as the ratio of private sector debt to GDP at current market prices.

Information technology services and network communication services, such as authentication and authorisation, which enable the governance body of an electronic payment instrument scheme or arrangement, an operator of a payment system and/or participating payment service providers to provide services.

See Eurosystem staff projections

The discharging of an obligation by means of a transfer of funds and/or a transfer of securities which is dependent on the fulfilment of certain conditions and can therefore be rescinded by one or more parties. See also final settlement

A transfer order is provisional as long as it can be revoked by the originator or as long as it can be reversed subject to certain conditions. See also final settlement

Amounts set aside before arriving at the profit and loss figure in order to provide for any known or expected liability or risk, the cost of which cannot be accurately determined.

public sector purchase programme

The rate used for the conversion of one currency into another that equalises the purchasing power of the two currencies by eliminating the differences in the price levels prevailing in the countries concerned. In their simplest form, PPPs show the ratio of the prices in national currency of the same good or service in different countries.

See payment versus payment (PvP)