Glossary

General Glossary

M

M1 

A narrow monetary aggregate that comprises currency in circulation and demand deposits maintained in MFIs and the Central Government (for example, in the Post Office or Treasury).

M2 

An intermediate monetary aggregate that comprises M1 plus deposits redeemable at notice of up to three months (short-term savings deposits) and time deposits with a maturity of up to two years (short-term time deposits) held by monetary financial institutions and central governments.

M3 

A broad monetary aggregate that comprises M2 plus marketable instruments, in particular, repurchase agreements, money market fund shares and units as well as debt securities with a maturity of up to two years issued by the Monetary Financial Institutions.

Main obverse motif 

Doors and windows appear on the obverse of euro banknotes, symbolising Europe's spirit of openness and co-operation.

Main refinancing operation 

The main single monetary policy instrument to control interest rates and money market liquidity. It is also the main liquidity supply channel for credit institutions. It is a liquidity providing operation instrumented by reverse transactions, carried out by the Eurosystem with credit institutions and executed by the national central banks by weekly standard tenders and with a maturity of one week. The ECB usually publishes a calendar of tenders and all credit institutions meeting the general requirements to be considered a counterparty can present their bids. The minimum bid interest rate set by the ECB for each tender is the main official Eurosystem interest rate as it provides the stance for monetary policy.

Main reverse motif 

The reverse side of euro banknotes features a bridge as a metaphor for communication among the people of Europe and between Europe and the rest of the world. The design of Euro banknotes show different architectural styles that correspond to seven eras of European cultural history: Classic, Romanesque, Gothic, Baroque and Rococo, the iron and glass architectural eras and modern 20th century architecture.

Maintenance period 

The period over which credit institutions' compliance with reserve requirements is calculated. The maintenance period begins on the settlement day of the first main refinancing operation following the meeting of the Governing Council at which the monthly assessment of the monetary policy stance is prescheduled. The European Central Bank publishes a calendar of the reserve maintenance periods at least three months before start of each year.

Managing entity 

A member of the registered public debt market which has been authorised by the Ministry for Economic Affairs and Finance to perform registration tasks in said market. It keeps, in its third-party accounts, a record of the securities of non-own account holders in the Book-Entry System and maintains a global account therein which is an exact counterpart of said third-party accounts.

Marginal lending facility 

A standing facility of the Eurosystem which counterparties may use to receive overnight credit from a national central bank at a pre-specified interest rate against collateral (see also Key ECB interest rates).

Marked cheque  

A cheque through which the bank assures that the issuer of the same has enough funds, which are retained until payment is made.

Market maker 

Members of the public debt market whose role is to favour its liquidity and co-operate with the Treasury in disseminating public debt internally and externally. They participate in the network of mediators specialising in book-entry debt and acquire a series of price quotation and trading commitments in the book-entry debt market, as well as in relation to the issuing and placement of the debt issued by the Treasury. They are the only entities authorised to participate in the second rounds of government debt auctions subject to certain conditions. Their activities are monitored monthly, according to the participation criteria for primary and secondary markets, although the evaluation is made public by the Treasury once a year. Collaboration between these institutions and the Treasury was restricted to bonds and debentures, until the Resolution of 5 March 2003, of the Directorate General of the Treasury and Financial Policy, introduced the figure of the "bill market maker".

Maturity 

Date on which a payment obligation or commitment is receivable. For example, a bill of exchange can be drawn on a set date, within a certain term following the date of issuance, at sight, or at a fixed period after sight. If it is drawn at sight, this means that it shall be payable upon presentation, and must be presented for payment within the year following its date of issue.

Meffclear 

The MEFF Counterpart Clearing House for government debt transactions negotiated between its clearing members and/or customers. Initially, the scope of its services extends only to the government debt repurchase and cash transaction market, although its scope will be broadened to include interest rate, private fixed income and variable income transactions.

Metamerism 

The effect produced by materials apparently of the same colour under a certain light, while under another light, for example daylight, they show decidedly different colours. Metamerism is a well-known phenomenon in clothes shops, for those who want to imitate the colour of one fabric with that of an existing fabric. The colours should not only be compared under the artificial light of the shop, but also in daylight. Colour photocopiers do not reproduce such metameric effects. Metamerism is usually used on banknotes.

MFI consolidated balance sheet 

The balance sheet obtained by excluding the positions between MFIs that appear in the aggregated sector balance sheet (such as, for example, loans and deposits between MFIs). It offers statistical information on the assets and liabilities of the MFI sector as opposed to euro area residents that do not belong to this sector (that is, general governments and other residents) and non-residents. The consolidated balance sheet is the main source of statistical information for the calculation of monetary aggregates and is the basis for the regular analysis of the counterparties of M3.

MFI longer-term financial liabilities 

Deposits with an agreed maturity of over two years, deposits redeemable at a period of notice of over three months, debt securities issued by euro area MFIs with an original maturity of more than two years and the capital and reserves of the euro area MFI sector.

MFI net external assets 

The external assets of the euro area MFI sector (such as gold, coins and banknotes in foreign currency, securities issued by non-residents in the euro area and loans granted to non-residents in the area) minus the external liabilities of the euro area MFI sector (such as non-euro area residents' holdings of deposits, repurchase agreements, money market funds and securities other than shares issued by MFIs with a maturity of up to and including two years).

MIBOR  

The Spanish interbank interest rate that was the most commonly used reference rate for mortgage loans until the creation of the Euribor in 2000.

Micro-text or micro-printing 

This is the printing of a text with very small characters. Graphic characters in two reduced sizes appear on different areas of euro banknotes. Most people can see the text printed with 0.8mm high characters with the naked eye, whereas the 0.2mm high characters appear to be a thin line, although they can be read with a magnifying glass. Micro-printing offers protection against photocopying systems.

Minimum bid rate 

The lowest interest rate at which counterparty institutions can submit bids in variable-rate tenders corresponding to the principle financing operations. It is one of the official interest rates of the European Central Bank that reflects the direction of monetary policy.

Minimum reserve requirements 

Margin deposits that counterparties must maintain in national central banks. They are a monetary policy instrument that affects the market's structural liquidity needs and enables stabilisation of short-term interest rates. In the Eurosystem, minimum reserves are calculated by applying a ratio, currently 2%, referred to as reserve ratio or cash ratio, to the month-end balances of certain credit institution liabilities, generally for less than two year terms, which jointly form what is known as a reserve base. Said reserves must be held over a one-month period and are remunerated at Eurosystem main refinancing operation interest rates. The reserve maintenance period starts as of the settlement date of the first main refinancing operation subsequent to the Council meeting where monetary policy decisions are made. An entity is considered to fulfil the minimum reserve requirements during that month if the average daily balances in its central bank account is not less than the required amount.

Mixed deposit 

Also known as a combined deposit or structured deposit, this type enters into the category generically called "atypical financial contracts", and they are usually a combination of a time deposit and a derivative product. It is considered a high-risk instrument, as the marketing institution does not guarantee total reimbursement of the capital received.

Mobile banking  

A project developed jointly by banking institutions and mobile telephone operators, enabling users to make payments with their mobile phone terminals.

Moiré 

The effect produced by regular reticular images placed on top of each other. If the original image contains linear images with interlinear frequency in the order of line frequency of the screen applied, a moiré effect will appear. Readers, including colour photocopiers, read the image that they have to copy with miniscule photoelectric cells. If the original image contains linear structures with the same interlinear frequency as the photoelectric cells, the copy will also show a moiré structure.

Monetary aggregates 

Variables that quantify the money of an economy and which central banks normally define to carry out monetary policy analyses and to make related decisions. The Eurosystem has defined three monetary aggregates for the euro area: M1, comprised of banknotes and coins in circulation (currency in circulation) and demand deposits; M2, comprised of the liabilities included in M1 plus time deposits with a maturity of up to two years and deposits redeemable at notice of up to three months; and M3, which comprises the liabilities included in M2 plus repurchase agreements, money market fund shares and units as well as debt securities with a maturity of up to two years, issued by monetary financial institutions. The M3 monetary aggregate is the most stable, and therefore has been chosen by the Eurosystem, within its monetary policy strategy, to define a benchmark value for monetary growth.

Monetary analysis 

One of the pillars of the European Central Bank framework for the thorough analysis of risks to price stability, which is the basis of the monetary policy decisions taken by the Governing Council. Monetary analysis helps to assess medium-term trends in inflation, given the close relationship between money and prices in broad time spans. Monetary analysis takes account of the behaviour of a wide range of monetary indicators, including M3, their components and counterparties, credit in particular, as well as various surplus liquidity metrics. See also "Economic analysis".

Monetary Financial Institutions (MFIs) 

A term established by the Eurosystem for the group of financial institutions resident in the euro area, considered to be issuers of money. The term MFI includes the Eurosystem (ECB and national central banks), euro area resident credit institutions and all other resident financial institutions (predominantly, specialised credit institutions and money market funds), whose business is to receive deposits or close substitutes and, for their own account, to grant credit or to invest in securities.

Monetary Financial Institutions interest rate 

The interest rate applied by credit institutions and other resident Monetary Financial Institutions, excluding central banks and money market funds, to deposits and loans denominated in euro provided to households and non-financial corporations that are resident in the euro area.

Monetary income 

Income accruing to national central banks in the performance of the Eurosystem's monetary policy function. It derives from the assets held on its balance sheet as a balancing entry against banknotes in circulation and credit institution margin deposits. The monetary income obtained by each national central bank, referred to as "seignorage income", is pooled and redistributed among these at each year-end, in accordance with their share in the ECB's paid-up capital.

Monetary policy 

A series of actions undertaken by the central banks aimed at controlling interest rates and amount of money, in order to influence the financial conditions of an economy and achieve certain objectives. In developed economies, the objective of monetary policy is to maintain price stability.

Monetary policy instruments 

The measures available to the national central banks to regulate market liquidity and, by influencing financial conditions, achieve price stability. The Eurosystem has three groups of instruments: Open market transactions, standing facilities and minimum reserve requirements.

Money market 

The market in which short-term funds are raised, invested and traded. Instruments traded on the money market have a maturity of up to one year or are used through repurchase agreements.

Money market fund shares 

Shares in collective investment institutions which primarily invest in money market instruments and/or in other transferable debt instruments with a residual maturity of up to one year and/or which attempt to achieve a performance similar to money market interest rates.

Mortgage  

Rights in rem encumbering a property and that are normally used to achieve the necessary financing to purchase it (although it is also possible to mortgage chattels). Mortgages are registered in the Land Registry.

Mortgage bond  

A financial instrument or security issued by a financial institution which operates in the mortgage market. Its issuance must be announced in the Official State Gazette and its deed must be registered at the Companies Register.

Mortgage covered bond  

A fixed income financial instrument or security issued with the guarantee of the mortgage loan portfolio of the issuing credit institution.

Mortgage equity withdrawal  

A loan for which payment is guaranteed by the value of a property. In case of default, the lender receives the ownership of the asset mortgaged.

Mount of Piety 

A currency fund created with the contributions of individuals from a specific group in order to assign the funds to their members for pensions or aid in case of need.

Multicolour printing 

See four-colour printing.

Mutual guarantee and reguarantee companies  

Companies with variable capital having a specific regulation for the purpose of granting collateral in favour of their shareholders. Mutual guarantee companies are supervised by the Banco de España and at least four-fifths of their shareholders must be small and medium-sized enterprises. Therefore, mutual guarantee companies act as an instrument for business promotion which facilitates credit to SMEs as they allow to direct and promote the investment they guarantee.