Glossary

Monetary Policy Glossary

R

Referral value for M3 growth 

Year-on-year M3 growth rate in the medium term, compatible with the maintenance of price stability.

Repurchase agreement 

An agreement whereby the seller of an asset simultaneously obtains the right and the obligation to repurchase it at a set price on a future date or at the request of the other party. These agreements are similar to taking loans with collateral, the difference being that in the case of repurchase agreements, the seller does not retain ownership of the securities. The Eurosystem uses repurchase agreements with a set maturity in its reverse transactions. Repurchase agreements are included in M3 in those cases in which the seller is a Monetary Financial Institution (MFI) and the counterparty a non-MFI euro area resident.

Repurchase operation  

Financial operation in which an institution sells an asset (frequently government debt) to an investor, at the same time as it agrees its future repurchase at a certain price.

Reserve base 

The sum of the eligible balance sheet items (in particular liabilities) that constitute the basis for calculating the reserve requirement of a credit institution.

Reserve ratio 

The percentage defined by the central bank for each category of eligible liabilities included in the reserve base. This ratio is used to calculate reserve requirements.

Reserves requirement 

Minimum reserves that a credit institution must maintain in the Eurosystem. The requirements are calculated on the basis of the average daily balances during a maintenance period.

Reverse transaction 

An operation whereby the central bank buys or sells assets under a repurchase agreement or conducts credit operations against collateral.