Glossary

General Glossary

S

Safety deposit box  

A place specially reserved in the safes of bank branch offices which can be hired by customers upon request. This box can be used to deposit goods or cash without having to declare its contents.

Savings account/current account 

A deposit available on demand (at any time) in the case of the current account, or upon notice-in the case of the savings account (although this requirement is becoming less common and in practice the savings account assumes the practices of a demand deposit). The basic difference between them is that with the current account you can dispose of your funds through cheques, while the savings account uses a bank book, whose entries substitute the statements that are characteristic of the current account.

Savings book  

A synonym of savings account, it is a kind of deposit that is different to a current account because it uses a book and does not operate with cheques, although it may have other distinctive characteristics, depending on the institution, such as the need to give notice for availability, not allowing overdrafts, greater remuneration, etc.

Scanning 

Sequential tracking of every point of an image to be reproduced or processed. A light reader scans the image point-by-point and line-by-line. The reflection of each point of the image is detected by a photoelectric cell and the average value is stored in the memory of a computer, to later compose an image.

Second tier 

The trading area of the public debt market to which all members have access. It is a decentralised market in which the balancing entry is known and in which the intervention of a mediator is not obligatory, although it is communicated to the Book-entry System when it occurs.

Securities lending system 

Sell/buy-back system (or security swaps), organised by the Book-Entry System, aimed at reducing the securities settlement risk in the registered public debt market. By virtue of this system which, prior to voluntary accession thereto, functions automatically provided that there is sufficient balance in the cash account (or other securities account) of the overdrawn entity, a group of lenders and the Banco de España transfer the necessary securities to the overdrawn entity to complete the daily settlement simultaneously (or by means of securities swaps if the Banco de España is the lender) with penalisation.

Securities other than shares 

These represent the promise of the issuer (borrower) to make one or more payments to the holder (lender) at a future date or dates. These securities usually incorporate a specific nominal interest rate (the coupon) or are sold at a discount on the amount that will be reimbursed upon maturity. Securities other than shares at a term of over one year are classified as long-term securities.

Securities settlement system (SSS) 

Transfer system for the settlement of securities operations. It covers all the institutional procedures necessary for the clearing and settlement of securities operations, as well as for their custody.

Securitisation 

A transaction whereby an institution transforms a non-tradable collection right or asset (for example mortgage loans of bank customers) into homogenous, standardised fixed-income securities, which it can then trade on organised securities markets (exchanges).

Security issued at a discount 

A fixed-income security issued at below its par value, income from which is received from the difference between the purchase price and the nominal value at which it is redeemed.

Security paper 

The type of paper used for manufacturing valuable documents. It is the support medium used for printing banknotes and for certain security measures. Furthermore, it is in itself a security feature because it contains watermarks and a filament or thread. Commercial papers are mainly supplied with optical whiteners which render them fluorescent, while security paper is not fluorescent.

Security thread 

"A security feature frequently used in banknotes. The thread is sometimes intertwined in the structure of the fibres of the paper (embedded), and sometimes it comes to the surface of the paper at intervals ("window" thread). Security thread can be made of metal or plastic, transparent or opaque, coloured or colourless. If the security thread is completely embedded in the structure of the paper, it is invisible in reflected light but visible when held against the light. In many cases security threads are supplied with printed micro-text. Other variations of security threads are fluorescent printing, holograms, etc. On euro banknotes, the thread is embedded into the paper and has micro-printing."

See-through register 

This is a security feature partially printed on the obverse of the banknote and partially on its reverse. When held against the light, both parts should combine to show the full image. The see-through register makes counterfeiting difficult as it is very complicated to reproduce exactly the two images that make up the motif.

Seizure  

Withholding, immobilisation or confiscation of assets by order of a judge or competent authority.

Sell/buy-back transaction 

A transaction that constituted by two linked purchase/sales in opposite directions, contracted at the same time but with different settlement dates. In the case of a participant which purchases the securities in the first sell/buy-back transaction it is a temporary acquisition, while for their counterpart it is a repurchase agreement.

Sensors 

Devices able to detect specific security features on banknotes.

SEPA 

This is the acronym for Single Euro Payments Area, an initiative of the European banking industry aimed at establishing a single market for retail euro payments. The objective of SEPA is that consumers, businesses and other economic agents can make and receive euro payments, inside or outside national borders, as easily, quickly,securely and under the same basic conditions as they do today in their own countries, regardless of their location. The Payment Services Directive will contribute to achieving this objective by harmonising the different existing regulation frameworks, and equalling rights and obligations in terms of money transmission services. Since January 2008, SEPA transfers can be made, cards are issued and operations are processed with these cards, according to SEPA requirements. The incorporation of the Directive will also allow direct debits adapted to SEPA to be offered. Likewise, work continues in different areas to make SEPA an irreversible reality by the end of 2010.

Sepblac 

Initials in Spanish of the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences. Sepblac is the Spanish Financial Intelligence Unit. It is one of the supporting organisations of the Commission for the Prevention of Money Laundering, presided by the State Secretary for Economy. It carries out actions to prevent the use of the financial system or of companies or professionals of another nature to launder money, as well as investigating and preventing administrative infringements of the legal regime on capital movements and external economic transactions.

Series (first, second, etc.) 

A unitary series of banknotes of different denominations that form a monetary system. The first series of euro banknotes, issued on 1 January 2002, contains seven denominations (€5, €10, €20, €50, €100, €200 and €500).

Settlement of interests  

The payment of the interest accrued under the terms established in a bank account contract (interest rate, settlement period, etc.)

Settlement risk 

The risk that settlement in a transfer system will not take place as expected, usually owing to a party defaulting on one or more settlement obligations. This risk includes, in particular, operational risks, credit risks and liquidity risks.

Share  

An equity instrument or security which represents a fraction of a company's capital, converting its holder in a shareholder of the company and awarding him/her a series of financial and voting rights, such as the right to participate in the company's profits via receipt of a dividend, preferential subscription rights for new shares or the right to vote at General Shareholders' meetings. Shares can be traded on regulated markets or stock exchanges. From an investor's viewpoint, a share is an equity instrument, which means it is not possible to know the return that an investment in shares will yield. Therefore, investments in shares involve a level of uncertainty, in the sense that it is not possible to anticipate the dividends (profits to be distributed) that will be obtained, or to predict how the market price (listing) will evolve in the future.

Silkscreen printing 

A printing process in which the ink is applied onto the paper through a metal or fibre mesh. The ink passes onto the paper through the areas not blocked by the mesh. Optically variable ink (OVI) is applied to banknotes using this technique.

Simultaneous 

See «sell/buy-back transaction».

Single monetary policy 

The single monetary policy is the policy applied in the European Community States which have joined EMU and adopted the euro as their currency by means of a common monetary authority, the Eurosystem (made up of the ECB and the central banks of those States), that is responsible for taking and executing decisions on monetary policy throughout the area. The Governing Council of the ECB is the supreme decision-making body of the Eurosystem, which makes decisions on monetary policy according to the situation of the euro area as a whole. The national central banks of Member States are responsible for conducting monetary policy operations in a decentralised way, while following common guidelines.

Soft loan  

A loan extended with favourable conditions (term and interest rate) for the borrower.

Specialised credit institution  

Credit institution which, without being able to receive deposits from the public during the deposit period, engages in one or several of the following activities: granting of loans and advances, factoring, financial leasing, issuance and management of credit cards or granting of sureties and guarantees.

Specimen 

"A legitimate banknote marked, by printing or a perforation system, with the word ""specimen"" to make it a banknote of reference for consultation, study and analysis. In Spanish, the word espécimen is used."

Stability and Growth Pact 

An agreement between EU Member States whereby these undertake to maintain healthy public finances in the third stage of EMU, as a means for strengthening the conditions to achieve price stability and strong sustainable growth that will favour job creation. The Stability and Growth Pact establishes maximum reference value for budget deficit (3% of GDP) and government debt (60% of GDP). Nevertheless, the Pact allows Member States to incur an exceptional and temporary deficit in excess of the aforementioned proportion in the event of unusual circumstances beyond their control or serious economic recession. Within the framework of the pact, those EU Member States which have adopted the euro must submit a stability programme to the EU Council every year in order for both institutions to evaluate the degree of fulfilment of the pact by each Member State. This programme must include the situation with respect to budgetary and government debt balance objectives, expected evolution of the most relevant macroeconomic variables, the measures that will be adopted to reach the objectives of the pact and analysis of the changes in the economic scenario with regard to achievement of objectives. Those EU Member States which have not yet adopted the euro must submit a convergence programme to the Council and Commission every year, similar to that described above, but also including monetary policy objectives and their relation to price stability and exchange rates. The European Commission and Economic and Financial Committee analyse said stability and convergence programmes and inform the EU Council as to their suitability. If the Council observes significant deviations with respect to the achievement of objectives, it will make recommendations to the corresponding Member State. If the earmarked Member State does not take the adequate measures, the recommendations will become warnings and can lead to economic sanctions.

Standing facility 

A central bank instrument available to counterparties at their own initiative. The Eurosystem offers two standing facilities: The marginal lending facility and the deposit facility.

Stars of the European Union 

These form part of the European Union symbol that appears on euro banknotes. The twelve stars of the symbol allude to the dynamism and harmony of modern-day Europe.

Straight-through processing 

Processing of funds transfers and transactions, including the automated processing of confirmations and suspensions, if any, as well as the generation, clearing and settlement of payment orders.

Strip 

A marketable security with regular coupons that can be split and traded separately to the principal, whereby a security with n regular coupon payments becomes n 1 (including the principal (bonds issued at a discount). As far as the Book-entry System is concerned, the possibility of splitting and reuniting medium and long-term central and regional government bonds that have received strip rating requires authorisation from the Ministry of Economic Affairs and Finance. Strips can only be undertaken by market makers and they must on nominal amounts of multiples of €100,000, with a minimum of €500,000.

STRIPS 

The acronym for Separate Trade of Registered Interest Principal Securities.

Structural operation 

A procedure to adjust structural liquidity in the lending sector. It can be by injection or absorption of liquidity, instrumented through reverse transactions, outright transactions or by issuing ECB debt certificates, which the Eurosystem carries out with credit institutions and the national central banks enforce by standard auctions or through bilateral procedures, which may or may not have a regular periodicity and no standardised maturity.

Subordinated debt  

A fixed-income instrument issued with a subordinated status in relation to those of normal issues, mainly because its owner has a lower priority in the hierarchy of common creditors in terms of collection preference (priority order). In the case of credit institutions, this debt is considered, together with preference shares, a hybrid capital instrument in that it fulfils certain requirements that partially assimilate it to the ordinary capital of credit institutions and is accountable as entity equity.

Subrogation  

Modification of the terms and conditions of a contract in order to substitute one person (natural or legal) for another in the exercise of a right or fulfilment of an obligation. In a mortgage loan, for example, it implies changing the financial institution with which the borrower assumes the payment obligation.

Substrate 

This is the material on which an image is printed, such as paper, plastic, etc. In the majority of cases, banknotes are printed on paper. For euro banknotes the substrate, printing medium, is paper.

Supervision of financial institutions  

The basic purpose of banking supervision is to safeguard the stability of the financial system, for which it is necessary to monitor solvency and compliance with regulations which specifically govern credit institutions. From this perspective, the supervisory function of the Banco de España consists of designing and applying analysis and verification systems which provide up-to-date information on the situation of institutions and their risk profile. This information is used to adopt any pertinent measures to prevent possible crises or reduce their number, importance and cost.

Supplier 

A natural or legal person which supplies an asset or service to an entity.

Surety 

A form of guarantee that consists of a commitment undertaken by a person (the guarantor) to assume responsibility for the obligation contracted by another person (the debtor) in the event of non-fulfilment by the latter.

Syndication 

An ever more frequent issuance procedure used by sovereign issuers that consists in a group of institutions committed to issuing securities among their investors, in exchange for a sales and underwriting fee. As well as improving debt distribution between final investors, this technique allows a sufficiently high outstanding balance to be reached, quickly leading to its presence in international electronic trading platforms, which creates greater liquidity of the new reference. Although syndication permits multiple structures, a common feature of all of the structures is the existence of a restricted group of institutions selected by the issuer that lead, organise and, in most cases, underwrite issuance. The Spanish Treasury used this procedure for the first time in March 2002, to mark the issuance of the first period of the new benchmark fifteen year bond.

Systemic risk 

The risk that the inability of one participant to meet its payment obligations in a system will cause other participants to be unable to meet their obligations as well, potentially with spill-over effects such as considerable liquidity or credit problems, threatening the stability of the financial system. That inability to meet obligations can be caused by operational or financial problems.