General Glossary

A mechanism for distributing the share capital of the European Central Bank (ECB) among the central banks of the European System of Central Banks (ESCB), which are its sole shareholders. The ECB's share capital, which is fully subscribed, amounts to €5,760,652,402.58. The central banks integrated in the Eurosystem have paid up the total subscribed capital, while those European Union (EU) States which have not yet adopted the euro have only paid 7%. The weighting criterion followed to assign a percentage of share capital to each central bank has been the sum of 50% of its percentage investment in the EU population and 50% of its percentage investment in the EU's gross domestic product. The value is adjusted every five years based on these same criteria. The ECB's Governing Council uses the weightings of the Eurosystem's central banks as a criterion for allocation and distribution, among others, of the ECB's profits and losses, monetary income and output of euro banknotes. The central banks of Member States which do not participate in Economic and Monetary Union (EMU) do not participate in the distribution of ECB profits and losses.

A consultative body of the Council of the European Union (EU) and the European Commission created by the Treaty on the European Union, which began its activities at the start of stage three of EMU on 1 January 1999, replacing the Monetary Committee. Its main responsibilities are: to issue advisory opinions; to keep under review the economic and financial situation of the European Community, in particular on financial relations with third countries and international institutions; to report the situation of capital movements and freedom of payments in the Community; and to contribute to the preparation of the work of the Council of the European Union, especially the tasks related to economic and monetary policy. The Committee is made up of two representatives from the European Commission, two from the European Central Bank (ECB) and two from each Member State, one of which is usually a senior official from the Ministry of Economy and the other from the national central bank. To guarantee its smooth operation after the EU enlargement, the Committee has modified the criteria for attending meetings, according to the matters to be debated. In this way, the national central bank representatives only attend when matters relating to their functions and experience are dealt with. In other cases, the Committee can convene in "restricted composition", so that only the representatives from the national administrations, the Commission and the ECB are present.

The process that led to the single currency, the euro, the single monetary policy of the euro area and the co-ordination of the economic policies of European Union Member States. This process was implemented in three phases, in accordance with the provisions of the Treaty. The third and last phase commenced on 1 January 1999 with the transfer of monetary competencies to the European Central Bank and the introduction of the euro. The changeover of coins and notes was carried out on 1 January 2002, thus completing the process of creating the EMU.

The area encompassing those Member States that have adopted the euro as a single currency in accordance with the Treaty, and in which a single monetary policy is applied under the responsibility of the Governing Council of the European Central Bank.

Political structure created by the 1992 Maastricht Treaty, consisting of Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. It is based on three basic pillars: The European Communities, co-operation regarding a common foreign and security policy and police and judicial co-operation in criminal matters. Its main objectives are: The creation of an area without internal frontiers, the strengthening of social and economic cohesion and the establishment of an economic and monetary union. The five basic institutions of the EU are: The European Parliament, the Council of the European Union, the European Commission, the Court of Justice of the European Union and the European Court of Auditors.

Private debt assets or securities that confer their owner the right to exchange them for shares of the issuing entity, at an established price and on an established date. If they entitle their owner to obtain old company shares they are referred to as "exchangeable", but if they can be transformed into newly issued shares they are referred to as "convertible" bonds.