Monetary Policy Glossary

Monetary Policy Glossary

Buscar por letra:

P

Pledging 
An operation whereby a pledge is subject to the payment of a loan received. It implies handing over personal property to a creditor or third party as a guarantee of fulfilment of an obligation (for example, shares may be pledged as a guarantee for obtaining a loan).
Price stability 
"The primary objective of the Eurosystem, defined generically in the Treaty establishing the European Community. The Governing Council of the ECB has defined price stability as a year-on-year increase in the Harmonised Index of Consumer Prices for the euro area that is below but close to 2% over the medium term. This definition lays down a ceiling and at the same time, by indicating that it is an "increase", it implies that deflation is not compatible with price stability. The importance of this objective lies in the fact that a stable price scenario is associated with low interest rates, it fosters decisions made on investment and consumption, it increases transparency in price structures, which enables better resource allocation and avoids the negative effects that high inflation rates have on social groups dependent on incomes that have little scope for adaptation to price increases, such as pensioners or holders of fixed income securities."