Glossary

General Glossary

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Accept a commercial bill 

Act by which the drawee (who must make a payment) accepts their obligation deriving from a commercial bill (bill of exchange, promissory note, etc.). The signature of the drawee on the obverse of the document is equivalent to their acceptance.

Account holders 

Participants in the quoted public debt market who keep a securities account open in their own name in the Book-Entry System.

Accounting entry 

Entry or register in the accounting record of an account.

Acquirer 

A credit institution that provides a commercial establishment with a mechanical or electronic device (point of sale terminal) to collect the relevant data of customers' cards for the purpose of authorising a payment transaction.

Acronym 

A word composed of the initials of other words. The top of the obverse of euro banknotes features the acronyms of the European Central Bank (ECB) in all its possible variants in the official languages in the European Community.

Advance bank guarantee  

A document issued by a financial institution which, while not constituting a firm commitment, expresses an intention to grant a definitive guarantee to the interested party.

AER (Annual Equivalent Rate) 

The interest rate that indicates the effective yield or actual cost of a financial product. The AER is calculated using a standardised mathematical formula that takes into account the nominal interest rate of the transaction, the frequency of the payments (monthly, quarterly, etc.), bank fees and other operating expenses. In relation to loans, the calculation of actual cost does not include certain items, such as the expenses that the client may avoid by using the powers granted to him in the contract, expenses that must be paid to third parties or expenses relating to insurance and guarantees (where the institution obliges the client to take these out in order to grant the loan).

Agent 

A person to whom another person grants power of attorney to act in their name. In the banking sector, a credit institution agent is a natural or legal person (it can be another credit institution) to which the institution has granted power of attorney to act in their name with clients, negotiating or entering operations that are typical of a credit institution's activity.

Alteration 

The modification of a document so that it passes as genuine under normal circumstances of use.

Annuity 

An amount which is paid annually for the purpose of amortising a debt, loan or debenture loan. It is comprised of two parts: one corresponding to the capital to be returned and another corresponding to the interest.

A returned, bad or overdrawn cheque  

A drawee cheque for which the issuing person does not have sufficient funds to honour its payment. It is a fraudulent act committed against a third party and is considered a crime.

Armoured vehicle 

A vehicle plated with iron or steel sheets which protect the people and items carried inside it. Armoured vehicles are used to transport Banco de España euro notes.

Asset-backed bond  

Security issued by a securitisation special purpose entity and backed, with regards investors, by the assets used to constitute said special purpose entity, normally acquired from an institution that seeks to attain funding in this way. Mortgage assets (lending) from a financial institution are usually used to constitute securitisation special purpose entities.

Asset operations  

Any operation carried out by a credit institution wherein the public funds are invested and which entails a certain level of risk. For example, customer credit or loans. This denomination originates from the fact that the book entry is made under assets in the credit institution's balance sheet.

Atypical financial contracts 

The result of a combination of two types of products with different characteristics: a deposit, normally short-term, which is usually remunerated higher than market rate, and another product, normally longer term, which can take different forms (a share in an investment fund or other deposit, the remuneration of which may be linked to the quotation price of a share or combination of shares or to the evolution of a stock market index, using different formulas to apply said index). These contracts are not traded on organised secondary markets, and therefore this "deposit" does not allow early repayment, even if the evolution of benchmark indexes were to recommend it. The information brochures of these products are registered at the National Securities Market Commission (CNMV). They are complex, high-risk products for which a credit institution receives money or securities or both from its customers, assuming a refund obligation at an amount which depends on the evolution of a share, a basket or a stock market index. Consequently, there is no commitment to fully refund the capital received.

Auction 

Issuance procedure generally used by the Treasury. Investors present the issuer with their requests, which can be competitive (they reflect the prices that they are willing to pay for the securities) or non-competitive (they do not reflect said prices). The issuer decides the minimum price they agree to receive, rejecting all the lower priced requests.

Authorised signature  

The signature of the person who a current account holder authorises to dispose of funds (authorised person)

Automated teller machines 

Electronic devices which mainly allow cash withdrawals by a payment card holder.

Autonomous liquidity factors 

Liquidity factors that do not normally stem from the use of monetary policy instruments. They include, for example, banknotes in circulation, government deposits with the central bank and net foreign assets of the central bank.

Available or registered portfolio 

Balance of the securities account of an agent participating in the registered public debt market. It represents the volume of registered securities owned by them, regardless of the type of acquisition method used at the time of calculation.

Average discount rate 

The percentage of the total value of the transactions carried out at a point-of-sale terminal that is collected from the trader by the acquiring institution. The discount rate applied to each trader is the result of bilateral negotiation between the trader and the institution and, according to the available information, is not set according to the origin of the card, but according to the type of commercial relationship existing between the parties. Management organisations gather said information from their members using surveys.

Average interchange rate 

The percentage of the total value of the transactions made at a point-of-sale terminal that the acquiring institution makes over to the issuing institution as payment for the services rendered by the parties. For cash machine transactions, the direction of the transfer is the inverse, i.e. from the card-issuer to the cash-machine owner, given that for cash withdrawals, balance queries, statements and the like, it is the institution that owns the cash machine that adds value to the card, and bears costs for which it should be compensated.

Average note life 

The average time that passes between the banknote being issued for the first time and it returning to the central bank and being withdrawn from circulation. This is usually longer for high-value notes than for low-value ones, which deteriorate more rapidly due to their more frequent use.