ANNUAL REPORT 2008 - Polymer Bank Notes of the World

Financial stability: condition in which the financial system – comprising financial intermediaries,markets and market infrastructures – is capable of withstanding shocks and the unravelling offinancial imbalances, thereby mitigating the likelihood of disruptions in the financial intermediationprocess which are severe enough to significantly impair the allocation of savings to profitableinvestment opportunities.Financing gap of non-financial corporations: the financing gap can be defined as the balancebetween the corporate savings (through retained earnings and depreciation allowances) and thenon-financial investment of non-financial corporations. The financing gap can also be defined onthe basis of the financial accounts, as the balance between the net acquisition of financial assets andthe net incurrence of liabilities by non-financial corporations. There are statistical discrepanciesbetween the two measures owing to differences in source statistics.Fine-tuning operation: an open market operation executed by the Eurosystem in order to dealwith unexpected liquidity fluctuations in the market. The frequency and maturity of fine-tuningoperations are not standardised.Foreign exchange swap: simultaneous spot and forward transactions exchanging one currencyagainst another.General Council: one of the decision-making bodies of the European Central Bank (ECB).It comprises the President and the Vice-President of the ECB and the governors of all the NCBs ofthe European System of Central Banks.General government: a sector defined in the European System of Accounts 1995 as comprisingresident entities that are engaged primarily in the production of non-market goods and servicesintended for individual and collective consumption and/or in the redistribution of national incomeand wealth. Included are central, regional and local government authorities, as well as socialsecurity funds. Excluded are government-owned entities that conduct commercial operations, suchas public enterprises.Governing Council: the supreme decision-making body of the European Central Bank (ECB).It comprises all the members of the Executive Board of the ECB and the governors of the NCBs ofthe Member States that have adopted the euro.Gross operating surplus: the surplus (or deficit) on the value of output of production activitiesafter the costs of intermediate consumption, compensation of employees and taxes less subsidieson production have been deducted, but before payments and receipts of income related to theborrowing/renting or owning of financial and non-produced assets have been taken into account.Harmonised Index of Consumer Prices (HICP): a measure of the development of consumerprices that is compiled by Eurostat and harmonised for all EU Member States.Implied volatility: the expected volatility (i.e. standard deviation) in the rates of change of theprice of an asset (e.g. a share or a bond). It can be derived from the asset’s price, maturity date andexercise price of its options, as well as from a riskless rate of return, using an option pricing modelsuch as the Black-Scholes model.ECBAnnual Report2008279