Glossary

General Glossary

B

Balance/Available balance 

In accountancy, the balance is the difference between credit and debit. In a current account, a debit balance expresses the account holder's debt with the entity, while a credit balance expresses the entity's debit with the customer, that is, an amount that can be drawn by the customer. The available balance is that which may be freely used. Balance and available balance do not always coincide, as part of the former may be withheld to fulfil a payment order which has been processed but not yet settled.

Balance of payments 

A statistical statement that summarises, for a specific period of time, the economic transactions of an economy with the rest of the world. The transactions considered are those involving goods, services and income, those involving financial claims on, and liabilities to, the rest of the world and those that are classified as transfers (such as debt forgiveness).

Banco de España direct accounts 

Book entry securities accounts belonging to third parties that have chosen the Banco de España as their managing entity. The operation of these accounts is limited.

Banco de España Settlement System (SLBE) 

Payment system managed by the Banco de España, whereby interbank market deposit operations, FRA market trades and the cash of public debt market operations, among others, are settled among account holders. In this network, the communication of the two contracting parties is required for each operation, except in the case of the blind government debt market where, due to the unawareness of the counterparty, communication is threefold, as the communication of the blind broker which has mediated the operation is required.

Banker's cheque  

A document issued by a banking entity which obliges it to pay a certain amount of money.

Bank guarantee  

Guarantee issued by a financial institution in favour of a customer thereof.

Banking ombudsman  

An agency created by Law 44/2002, on Financial System Reform Measures, in conjunction with the Investment Ombudsman, the Insurance Ombudsman and the Pensions Ombudsman. Its explicit purpose is to protect banking service users' rights through the resolution of credit institution-related complaints, claims and consultations. It is associated with the banking supervisor, that is, the Banco de España, although with maximum autonomy of action. The law establishes that the person appointed as Ombudsman must be of renowned prestige in the economic and financial sphere with the necessary professional experience.

Bank Lending Survey 

A quarterly survey on credit policies conducted by the Eurosystem since January 2003. This survey, which is aimed at a predetermined sample of credit institutions within the euro area, includes qualitative questions regarding loan approval criteria, the conditions applicable thereto and company and home credit demand.

Banknote briquette 

A conglomerate of tiny pieces of banknotes compacted by pressure. Banknotes that are unsuitable for circulation are destroyed and the residual material is generally compacted into briquettes.

Banknote design 

The process producing the artistic conception of a series of banknotes.

Banknote information campaign 

A series of actions applied to the achieve the objective of informing the public on the characteristics of banknotes. When the euro banknotes were issued, the European Central Bank and the national central banks carried out an intensive information campaign on their characteristics.

Banknote migration 

The passing of banknotes issued in one country to another, so that they are included in the notes in circulation in that country. Euro banknote migration occurs between countries in the euro area.

Banknote numbering 

Numbering allows to differentiate one banknote from another of the same denomination. Banknote numbering in euros is always printed twice on the reverse. One of the numberings of euro banknotes is optimally readable (OCR).

Banknote packaging 

A bundle of different units of groups of banknotes (hundred, thousand and tens of thousand). A common packaging standard has been established for euro banknotes.

Banknote printer 

The factory where banknotes are produced using the most advanced graphic art technology. In the Eurosystem there are currently fifteen printers authorised to produce euro banknotes. The quality control process followed by these banknotes guarantees that they are identical, regardless of the printer that produces them. Therefore, all euro banknotes have the same appearance and can be used in any of the machines that accept or dispense banknotes in the euro area.

Banknote security features 

Certain substances, special features or printing processes that are incorporated into the banknote during production thereof, which aid identification and prevent counterfeiting. Well-known examples of banknote security features are: the palpable raised intaglio dye layer, watermarks, see-through register and optically variable elements such as holograms and optically variable dyes.

Banknote sorting machine 

An automatic processing machine that counts banknotes, verifies their authenticity and classifies them by state of use.

Banknote to be verified 

A suspected counterfeit banknote which is presented (or sent) to the issuing central bank for verification. After being analysed, if the banknote is legitimate, the central bank gives the presenter a new banknote of equivalent value. If the banknote is counterfeit, the central bank communicates this fact to the presenter and does not exchange it for another banknote.

Banknote verification 

The evaluation of the legitimacy of euro banknotes is based on the verification of several security features by means of sight (observing the watermark, the security thread and see-through register against the light), touch (observing the tactile sensation produced by the raised intaglio print in the different parts of the obverse side of the banknote) and rotation (observing the optical effects produced by the hologram and optically variable dyes).

Banknote without legal tender status 

A banknote that is no longer legal tender. Although it cannot be used to make payments, it can be exchanged at the central bank for another banknote of equal value. Banknotes in pesetas are not longer legal tender, but they can be exchanged for euro banknotes in the Banco de España until 31 December 2020.

Basis point 

The minimum percentage price quotation unit in financial markets. This concept may make reference to prices or profitabilities and is equivalent to the least significant decimal of a standard price quotation.

Benchmark portfolio 

In relation to investments, benchmark portfolio or index constructed on the basis of the objectives for the liquidity, risk and return on the investments. The benchmark portfolio serves as a basis to compare the behaviour of the actual portfolio.

BIC  

The BIC (Bank Identifier Code) identifies the bank that is the beneficiary of a transfer. It completes the information provided by the IBAN. It normally consists of eleven characters, although sometimes it may only have eight. Often it is also known as the Swift code or address. For an intra-Community transfer to be subject to the same commission as a national transfer of the same amount, the originator must provide the bank with the beneficiary's IBAN (International Bank Account Number) and BIC (Bank Identifier Code).

Bilateral procedures 

A mechanism whereby the central bank deals directly with only one counterparty or a few counterparties without making use of auction procedures, or performs transactions on securities markets or with market agents. The Eurosystem only assigns this mechanism in certain occasional fine-tuning operations or structural operations.

Bill discounting  

A financial operation through which a quantity is deducted from capital before its maturity date, in order to obtain it immediately. The quantity deducted is the price paid for the operation by the person who demands the funds and the return obtained by the party who offers the funds. For example, the discount of a bill of exchange allows its maturity to be brought forward in exchange for a reduction in its value.

Bill of exchange  

A payment order whereby the person who issues the document (the drawer) requests the payment of a certain amount of money by the drawee on a specific date (maturity) in favour of a third-party, whose name must appear on the bill. It is tradable and can be endorsed.

Blind market 

Trading floor where participants and debt traders, whether market makers or aspiring market makers, make firm purchase/sale price quotes through a group of brokers specialised in book-entry debt which offer the best purchase/sale prices. Therefore, transactions are performed without the knowledge of the transaction counterpart.

Bond  

Fixed-income asset issued on a long-term basis by a company, public agency or government. In Spain, it differs from an obligation in that the issuance deadline is shorter than that of the latter. It is normally an instrument quoted on the secondary market, due to which its profitability, if sold prior to maturity, will depend not only on the accrued interest but also on the net worth variation produced by its sale, based on its quotation price at a given time.

Bond market 

Market on which long-term securities other than shares are issued and traded.

Bonds 

Financial instruments whose future performance is known in advance, regardless of the results obtained by the issuing entity.

Bonds  

The name for the debt instruments issued by private companies or public institutions. They are characterised for offering the investor a fixed remuneration which is determined at the time of issuance.

Book entry 

Accounting record that represents a set of financial rights associated with a security. The person accredited in the entry records is presumed to be the holder of said security, third parties not being able to claim in good faith that they have acquired it against payment. The transmission of a book entry takes place by accounting transfer, without requiring the involvement of a notary public. Registration of the transfer is enforceable as to third parties and produces the same outcome as the traditional physical movement of certificates or documents. The legal standing for the transmission and for exercising the rights deriving from securities represented by book entries can be accredited by presenting certificates issued by the institutions responsible for the records. The only function of said certificates, unique for the same securities and for exercising those rights, is to accredit legal standing and they cannot be used as a traditional trading document.

Book-Entry System (CADE) 

A platform whereby Iberclear manages the central register of the securities traded in this market and organises the clearing and settlement of operations performed therein.

Borrower  

The person who receives an amount of money with the obligation to return it, together with the agreed interest, at the end of a fixed period.

Borrowing requirement 

A cash accounting concept that reflects the magnitude of the net appeal made by the government to external financial resources for the purpose of fulfilling the requirements imposed by the balance of its non-financial transactions and by the net variation in its financial assets. A negative net appeal is referred to as "debt capacity ratio."

Bridging loan  

A loan obtained as temporary financing and with the collateral of a future payment from the borrower that will enable him to pay it off.

Brokers 

Agents whose sole activity consists of contacting and advising the members of the public debt market, without their brokerage interposing in the operation. A group of brokers, such as the brokers of the Banco de España Settlement System, conducts its operations in the second tier of the market, while a subgroup of the former deals with trading on the blind market.

Business/corporate profitability 

Measure of corporate profits, basically in relation to sales, assets or equity. There are different corporate profitability ratios based on corporate financial statements, such as operating income ratio (sales minus operating expenses) in relation to sales, net income ratio (operating income plus other earnings and expenses, including taxes, amortisation and extraordinary income) in relation to sales, return on assets (which relates net income to total assets) and return on equity (which relates net income to funds contributed by shareholders). At a macroeconomic level, gross operating surplus, based on national accounts, for example, in relation to GDP or added value, is normally used as a measure of profitability.