The capital account is an item in the balance of payments. It comprises non-recurring unrequited transactions between residents and non-residents within a period. Typical transactions include not only inheritances and gifts but also debt relief.

Capital controls are administrative measures used to limit the freedom of movement of cross-border capital flows, e.g. by stipulating maximum admissible amounts of domestic currency that individuals can take abroad or imposing a mandatory obligation to exchange foreign exchange holdings earned abroad at a government-prescribed rate. Other capital control measures include taxes on capital imports/exports or volume restrictions and authorisation requirements pertaining to domestic currency trading.

The national central banks of all EU member states are ascribed a percentage share in the capital of the European Central Bank (ECB), known as the capital key. On the basis of the capital key, each national central bank contributes a set percentage of the ECB’s capital. A member state’s share is determined by the country’s size in relation to the European Union as a whole, size being measured by population and gross domestic product in equal parts. The capital key is recalculated every five years and is also adjusted whenever a new member joins the European System of Central Banks (ESCB). Only the central banks of euro area countries have to pay up their share in full. The central banks of the other EU member states have to contribute only 3.75% of their calculated share. Under this arrangement, the euro area countries are also the only ones with a stake in the ECB’s profits and losses, which are allocated in proportion to their capital contribution.

The capital market comprises all the markets on which long-term debt securities and equity capital, such as shares, are traded. Companies and public sector bodies procure long-term funds on the capital market. In a narrower sense, the term capital market is often used to define organised trading in securities, i.e. exchanges.

The capital market rate is the general term for the interest rate for the long-term provision of capital; in the narrower sense, it refers to the interest rate for long-dated securities. The yield on outstanding fixed-interest securities is often used as a measure of the capital market rate. In the case of solvent countries, the yield on ten-year government bonds is also used to determine the capital market rate.

The capital requirement is a rule set out in the field of banking supervision requiring banks to meet a certain capital ratio. The ratio is calculated by dividing available equity capital by total risk exposure. This is because banks’ operations are fraught with risk. For example, there is the risk of a borrower being unable to repay their loan (credit default risk) or financial market prices becoming unfavourable for the bank (market risk). In order to protect its creditors, the bank therefore needs sufficient equity capital to absorb any losses arising from this risk.

The Capital Requirements Directive IV (CRD IV) and the Capital Requirements Regulation (CRR) make up the EU legislative package implementing the banking supervision regulations largely set forth by the Basel III regime.

Carry trade describes the borrowing of funds or taking of positions at a lower interest rate and reinvestment of these funds at a higher interest rate. The two parts ("legs") of the transaction are often carried out in different currencies.

Banknotes and coins.

During cash processing, the Bundesbank checks banknotes and coins for authenticity and fitness for circulation. This is one of its tasks pursuant to Section 3 of the Bundesbank Act. In order to fulfil this task, the Bundesbank operates banknote and coin processing systems at its branches, which help ensure the high quality of cash in Germany at all times. Soiled or damaged banknotes are removed from circulation, shredded, compressed into briquettes and disposed of. Counterfeits are also removed during this process. The high-performance machines at the Bundesbank’s branches check up to 33 banknotes per second for authenticity and fitness for circulation. Coins that are no longer fit for circulation are also removed, invalidated on behalf of the Federal Ministry of Finance and sold to metal recycling facilities so that the metal can be reused.

In addition to the cash processing performed by the Bundesbank, private cash handlers are also allowed to process banknotes and coins and put them straight back into circulation, provided they meet certain criteria.

In banking parlance, cash-in-transit companies are private enterprises that offer the service of transporting valuables (especially cash). They play an important role in money circulation, as they transport cash between Deutsche Bundesbank branches, commercial banks and businesses (particularly trade). Since 2007, cash-in-transit companies may also be tasked with checking the quality and authenticity of cash themselves, using machines licensed by the Bundesbank.

Cashless payments are payment transfers that are carried out without the use of cash. Instead, book money is transferred from one bank account to another using cashless payment instruments. These instruments are credit transfers and direct debits, which are activated by various processes such as standing orders, card payments or mobile payments. To use cashless payment instruments, both the payer and the payee must have an account.

The smooth functioning of payment systems is a prerequisite for a stable financial system. Payment systems are one of the Bundesbank’s core tasks.

The cent is the smallest currency unit in the euro area. A euro is divided into 100 cents. The name is derived from the Latin word for hundred (centum). To differentiate between units in other currencies also called cent (e. g. US dollar), the term eurocent is also used.

A central bank is the institution responsible for monetary policy and the proper functioning of the monetary system in a country or area. Alongside monetary policy, a central bank's key tasks typically include managing the reserve assets and issuing banknotes. A central bank can also assume responsibility for banking supervision and payment systems. The most important monetary policy objective is usually price stability. In order to better achieve this objective, central banks are independent from political interference in many countries.

Credit balances held by banks with the central bank. Credit institutions use them to meet the reserve requirements and as working balances. Central bank balances are traded in the money market to redistribute liquidity between banks.

Central bank digital currency would be another form of money in addition to cash and existing deposits in central bank accounts, which would be issued by a central bank and would represent a direct claim against it. Unlike existing central bank deposits, depending on how it is designed, central bank digital currency could involve new functionalities for existing counterparties (“wholesale CBDC”). Equally, these functionalities could be made available to enterprises and individuals (“retail CBDC”). Up to now, central bank digital currency has mainly been discussed theoretically. However, the use of central bank digital currency is also currently being tested in practice in some countries.

Central bank money is the technical Bundesbank term used to refer to money that can only be created by a central bank. Central bank money comprises the coins and banknotes that the central bank brings into circulation as well as the sight deposits held by third parties at the central bank. The sight deposits that commercial banks hold with the central bank are particularly important in this context. First, they are used for the settlement of payment transactions. Second, by having these deposits, the commercial banks are satisfying their obligation to hold "minimum reserves" with the central bank. Central bank money is also referred to as "monetary base", "base money", "high-powered money" or, for short, M0 ("M-zero"), and occasionally as "reserves" or "reserve holdings" (however, the definitions of these terms can vary slightly). Although we talk about central banks providing "liquidity" to or withdrawing "liquidity" from commercial banks, we are actually referring to the provision and withdrawal of central bank money.

A central counterparty (CCP) in the context of financial markets is an institution that acts as an intermediary when a transaction is concluded between the buyer and the seller of a financial product. The CCP buys the financial product from the seller subject to the agreed conditions and sells it to the buyer subject to the same conditions. Thus, the original transaction between the buyer and the seller of the financial instrument is split into two separate transactions. This offers a number of advantages. First, the CCP reduces the costs of obtaining information for the market participants as they conclude a transaction with the CCP only. This means they do not have to check their counterparties’ solvency for each and every purchase or sale; the CCP only conducts business with counterparties it has examined and constantly monitors. In addition, the CCP assumes the settlement risk when clearing the financial transaction. To make sure the CCP is able to meet its obligations towards the market participants the latter must, when opening a new futures position, pay the CCP a certain percentage of the total volume of the transaction in question by way of collateral (“margin”). The market participants are required to change the amount of these margins in keeping with market developments. The introduction of the European Market Infrastructure Regulation (EMIR; EU Regulation on OTC derivatives, central counterparties and trade repositories) in 2012 placed a requirement on market participants to clear certain derivatives through a CCP.

Until 2011, the Central Credit Committee was the joint committee operated by the central associations of the German banking industry. Since then, this special interest group has been known as the "German Banking Industry Committee".

A central securities depository (CSD) is an organisation that specialises in the registration and safe custody of securities as well as the settlement of securities transactions in the financial markets. CSDs register newly issued securities and hold central securities accounts, which are used to record which securities belong to whom. Other services provided by CSDs include securities settlement against cash and the settlement of securities transactions in the financial markets. In this process, the buyer receives the traded security and makes a payment to the seller. The seller receives the payment and, at the same time, the traded security is deleted from its safe custody account. To this end, CSDs operate a securities settlement system which is used by banks and central counterparties, in particular. In the European Union, there is a CSD in practically every member state, plus two international CSDs. In September 2014, “Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories” (CSDR) was adopted.

A certificate is a security which securitises participation in price developments of the corresponding underlyings (e.g. equity shares or foreign exchange). These products meet the needs of many different kinds of investors because of the wide variety of forms they take (e.g. index certificates, bonus certificates, discount certificates, guarantee certificates). Certificates are debt securities issued by banks with limited or unlimited maturities, some of which can also be classified as derivatives. A distinction must be made between certificates and investment fund certificates or mutual fund shares issued by investment companies.

A certificate of deposit (CD) is a money market paper which a bank issues for refinancing purposes. When a bank customer buys a CD, he makes a short or medium-term time deposit, although the CD can be sold to a third party prior to maturity if the customer needs to raise liquidity.

A cheque is a document comprising a cashless payment instrument in a legally prescribed form whereby a customer unconditionally instructs his/her bank to pay a certain amount to the cheque submitter. With the trend towards paperless payment settlements – in the retail sector, by using debit cards in particular – cheques have increasingly lost importance in Germany.

In the world of banking, the term clearing refers to the determination of reciprocal claims, liabilities and delivery obligations. The clearing process follows the transaction between two counterparties, e.g. the purchase of a bond. The counterparties then set out the exact conditions of the agreed transaction in writing to prevent any misunderstandings. They also agree on the information required for the securities settlement transaction, e.g. the central securities depository and the payment channel as well as the place and time of delivery. As an option, transactions can be offset (netted). Counterparties often involve specialised institutions known as clearing houses in their clearing activities.

The term “climate change” refers to long-term shifts in temperatures and weather patterns. These can occur naturally and may be due, for example, to fluctuations in solar activity. Since the 19th century, however, climate change has mainly been caused by human activity, primarily the burning of fossil fuels such as coal, oil and natural gas.

Coinage prerogative is the sovereign right to design and mint coins. In the past, this was the right of the state ruler (e. g. the king). Today, the coinage prerogative lies with the government or the central bank. The finance ministers of euro-area countries have the coinage prerogative for the euro, and the issue of coins must be approved by the ECB. A profit is made if the production costs of coins are lower than their nominal value.

Pieces of metal that are used to fulfil money functions. Coins minted at face-value (i. e. where the value of the metal equals the value of the coin) are called full-bodied coins (face-value coins). Coins minted at below face-value are called fractional coins. In Germany, the Federal Government has the sole right to issue coins (coinage prerogative). It receives the profit from the difference between a coin's face value and the value of the metal it is made from. This profit goes into the federal budget. The Bundesbank is responsible for putting coins into circulation in Germany, as is the case for banknotes. The situation is similar in other euro-area countries. Unlike banknotes, euro coins are not uniform. A euro coin has a standard side, valid for all euro-area countries, and a national side.

A collateralised debt obligation (CDO) is a structured financial instrument backed by securities, which, in turn, are backed by credit claims, such as building loans, student loans or car loans. CDOs are subdivided into several classes – also known as tranches; incoming payments from the underlying securities are not distributed evenly among the individual tranches but according to a specific hierarchy. This structure ensures that the tranches first served have a relatively low default risk while the underlying claims may be of only moderate quality on average.

Collective action clauses (CACs) are standardised elements of bond agreements which allow a qualified majority of bondholders to make changes to the terms of the bond that then become legally binding on all holders of the bond. Such changes might include, for example, extending the maturity, reducing interest payments, and lowering principal repayments for all bondholders (haircut). CACs make bond restructurings easier. With effect from 2013, CACs are included in the terms of all new euro-area sovereign bonds with a maturity of more than one year.

A collective investment vehicle is an institution active on the capital market that accepts funds from investors and lend them to borrowers, for example by purchasing securities. Collective investment vehicles that are not banks cannot create money. The most important collective investment vehicles in Germany are mutual funds and insurance companies.

The Bundesbank’s statistics divide commercial banks into the following subgroups: big banks, regional banks and other commercial banks, and branches of foreign banks.

A commercial mortgage-backed security (CMBS) is a tradable security resulting from securitisation, which is collateralised by a pool of loans for commercial real estate and multiple-family dwellings.

Commercial paper are short-term debt securities issued by large corporations with maturities ranging from a few days to two years. They are issued to flexibly cover short-term liquidity needs. Yields are geared to representative money market interest rates in the corresponding maturity range.

Commodity money is a recognised means of payment in barter trade, which can have a value in itself and be used and consumed as a good. Examples of this are salt in the Middle Ages and cigarettes in the immediate post-war period. Commodity money is typical of less developed markets or modern economies with high inflation.

Launched in 2012, the Common Eurosystem Pricing Hub (CEPH) sets harmonised prices for the eligible assets of the Eurosystem national central banks and calculates a final Eurosystem price for each individual asset. The CEPH is a central platform used by the Eurosystem and is provided and operated by the Deutsche Bundesbank and the Banque de France. Since the Eurosystem operates a single monetary policy, the conditions of monetary policy operations have to be the same in every country. This also applies to the valuation of assets. CEPH prices around 30,000 marketable assets every day. It is not always possible to price marketable assets based on their market value. If no market value is available, the CEPH calculates a theoretical price. This means that the final Eurosystem price may be either a market price or a theoretical price. This price is then used by all the national central banks in the Eurosystem as a basis for valuing the collateral for their monetary policy operations.

Conditionality refers to a political principle by which requirements or conditions are imposed on a quid pro quo basis for services or assistance rendered. In the field of development cooperation, for example, some countries and institutions (such as the IMF or the World Bank) make the provision of payments or debt relief conditional on the fulfilment of specified requirements. In the case of the European sovereign debt crisis, euro-area countries participating in the assistance programmes must comply with certain conditions. This compliance is monitored by the Troika. A euro-area member state may only participate in the ECB's outright monetary transactions (OMT) if it has committed to a full EFSF/ESM macroeconomic adjustment programme or to a precautionary programme (Enhanced Conditions Credit Line).

A conduit is a special type of special purpose vehicle that purchases receivables and refinances them by issuing asset-backed commercial paper and similar securities usually with a short or medium-term maturity.

Contactless payments are payments made at special terminals without physical contact between the payer/payment medium and payee/payment terminal. All the necessary data are transmitted to the point-of-sale terminal via near field communication. To make contactless payments, the payment medium of the payer (e.g. bank card or mobile phone) and the payee must be appropriately technically equipped. Authorisation by entering a PIN or signing a receipt is not required for small amounts using this form of payment. This simplifies and speeds up the payment process.

Continuous linked settlement (CLS) is an international payment system that was launched in 2002 for the simultaneous settlement of foreign exchange operations according to the payment-versus-payment principle. This implies that service and payment occur at the same time and means trading partners are no longer required to bear the settlement risk. Moreover, it is now only the net amount (i.e. no longer the gross amount) which is transferred. Foregoing such a payment system could, as a result of the varying business hours around the globe, lead to a trading partner making a payment in the context of a foreign exchange operation and no payment being made in return due to the counterparty's temporary inability to pay. In 1974, the Cologne-based Herstatt Bank became involved in such a case, which is why, in German, settlement risk is also referred to as "Herstatt risk".

Convergence criteria are those requirements that an EU member has to meet before introducing the euro as its currency. According to these criteria, the economic situation in the accession country has to have been sustainable for a certain period of time prior to accession and be approaching that of the other members.

• Price stability: the inflation rate must be no more than 1.5 percentage points higher than the inflation rates of the three EU member states with the most stable prices.
• Budgetary discipline: the annual budget deficit should be no more than 3% of gross domestic product (GDP) and public debt should be no more than 60% of GDP. In addition, the Treaty on Stability, Coordination and Governance in the EMU limits the structural deficit to 0.5% of GDP.
• Exchange rate stability: the candidate country must have observed the normal fluctuation margins provided for by the exchange rate mechanism of the European Monetary System (EMS) for at least two years without severe tensions and in particular not have devalued its currency on its own initiative.
• Long-term interest rates: the nominal interest rates of long-term government debt securities or similar securities must be no more than two percentage points higher than the corresponding interest rates of the three EU member states with the most stable prices.
• Legal convergence: national legislation must be in line with the TFEU and the ESCB Statute. Incompatibilities with regard to central bank independence, the ban on monetary financing of governments and legal integration into the Eurosystem are to be removed.
  

The ECB compiles a detailed convergence report to check that all criteria have been met. This report covers inter alia market integration, development of the current account balance and further price indices. In addition, the report checks that there are no macroeconomic imbalances.

More on this topic:

Convertibility is the ability to exchange one currency for another freely and without hindrance at a generally applicable exchange rate. A currency is only considered fully convertible if neither residents nor non-residents are subject to a restriction of international payments and capital movements. The euro is a fully convertible currency.

If a credit institution is organised in the form of a registered cooperative society in Germany, it is also known as a cooperative bank. A cooperative is an association of members who have purchased one or more members’ shares each costing a fixed amount, and whose return depends on the cooperative’s results. Cooperative banks’ original focus was on promoting its members’ interests by means of lending. Today, cooperative banks operate as universal banks and business with non-members has increased greatly. People’s banks (Volksbanken) and Raiffeisen banks (Raiffeisenbanken) are traditionally organised as cooperative banks; however, some operate as public limited companies.

Core inflation is a version of the inflation rate which has been adjusted for certain components. To calculate the core inflation rate, highly volatile components – such as energy and food – are factored out or excluded. This makes it easier to identify the medium-term trend in the inflation rate.

A corporate bond is a debt security or an obligation issued by an enterprise with a view to raising funds on the capital market. Authorisation to conduct banking business under section 32 of the German Banking Act (Kreditwesengesetz or KWG) is not required for this purpose. Enterprises with access to the capital market can bypass banks and finance themselves directly via investors, such as private investors, funds and insurance corporations.

Under the corporate sector purchase programme (CSPP), the Eurosystem has also been buying corporate bonds in the euro area since June 2016. Bonds issued by credit institutions are excluded from the programme. Only corporate bonds with a sufficient credit rating are purchased ("investment grade"). The bonds must have a maturity of between six months and 30 years. The purchases are carried out by six national central banks of the Eurosystem, one of which is the Deutsche Bundesbank. The central banks can make their purchases in both the primary market (for new issues) and the secondary market. The CSPP is a component of the asset purchase programme (APP). Net asset purchases under the asset purchase programme (APP) ended as of 1 July 2022. The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP as long as necessary to maintain an appropriate monetary policy stance.

A correspondent bank provides other banks with many different services, for example payment transactions that are usually cross-border. This is called correspondent banking. In most cases, there is also a mutual account so that transactions can be settled directly in the home currencies of the participating banks.

Cost-push inflation is an increase in the general price level which stems from suppliers of goods and services passing on rising costs to their customers. The increase in these costs may be triggered by a number of factors, such as supply chain disruptions, production losses or geopolitical tensions leading to a rise in the prices of commodities and raw materials. Costs also increase when employee wages and salaries rise, when non-wage costs go up or when productivity decreases. Other factors include higher financing costs or a greater tax burden on firms. The cost pressure on firms can have domestic or foreign origins. Furthermore, companies can raise the prices of their products in order to widen their profit margins, which also results in a higher general price level. Increased inflation expectations can also play a role in this.

The Council of the European Union – often referred to as the "Council" – is an EU body consisting of government representatives of the member states, usually the responsible ministers. Together with the European Parliament, the Council forms the Union’s legislature. The Foreign Affairs Counsil is chaired by the High Representative of the Union for Foreign Affairs and Security Policy. The chair of the remaining nine Council configurations rotates every six months among member states. The President of the European Central Bank is invited to participate in Council meetings when the latter is discussing matters relating to the objectives and tasks of the ESCB. Not to be confused with the European Council, where heads of state and government of EU member states meet.

The countercyclical capital buffer is designed to help lend stability to the financial system by increasing banks’ resilience to losses during periods of stress in the financial system. With the buffer, banks hold capital above and beyond their minimum capital requirements. The buffer is built up as a preventive measure during periods of strong economic growth. During periods of stress, the buffer can be used to absorb losses such as those stemming from credit defaults. Each country sets its own buffer rate. Bank-specific buffer rates are based on the countercyclical capital buffer rates in jurisdictions to which banks have credit exposures and the levels of those exposures. The German Federal Financial Supervisory Authority (BaFin) sets the countercyclical capital buffer rate for credit exposures in Germany. The Bundesbank prepares analyses and BaFin can factor these analyses into its decision. The German Financial Stability Committee can also issue recommendations on the buffer.

A covered bond offers investors protection against default. Liability for a covered bond rests primarily with the issuer, usually a bank. In the event of an issuer defaulting, creditors are additionally protected against losses by a pool of collateral. This collateral often comprises mortgages or public sector bonds. This distinguishes covered bonds from both unsecured debt securities and asset-backed securities (ABS), which are issued by special purpose vehicles that have only the securing assets at their disposal. Pfandbriefe are one important form of covered bonds.

The Eurosystem already implemented a covered bond purchase programme (CBPP and CBPP2) in 2009 and 2012 to stabilise the market for these securities and thus help resolve banks’ refinancing problems. The third covered bond purchase programme (CBPP3) was introduced in conjunction with the asset-backed securities purchase programme (ABSPP) by the ECB Governing Council in September 2014 and has likewise been a component of the asset purchase programme (APP) since January 2015. Net asset purchases under the asset purchase programme (APP) ended as of 1 July 2022. The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP as long as necessary to maintain an appropriate monetary policy stance.

CRD IV is often used as an umbrella term for both the European Capital Requirements Directive IV and the Capital Requirements Regulation, which are in place to implement the new Basel III banking supervision regulations at the European level.

The Bundesbank operates a credit assessment system to examine and measure enterprises’ default risk. If the Bundesbank grants an enterprise "eligibility status", i.e. its assessment is positive, commercial banks can pledge their credit claims on these enterprises as collateral for their monetary policy operations with the Bundesbank. Independent of monetary policy operations, interested enterprises can also request a credit assessment for themselves.

A credit card is a cashless payment instrument. Credit cards are either issued directly by a credit card company (Diners, American Express) or together with a bank (MasterCard, Visa). Credit card holders can use these cards in shops that are connected to the credit card system to make cashless payments and to withdraw cash from ATMs. Credit cards are also often used for online payments. When using a credit card, the holder does not just make a payment but also generally raises a short-term non-interest-bearing loan as the credit card company usually debits the debtor’s account at a later point in time. In addition, credit card companies generally offer the option of extending this loan – but then with interest.

Credit channel is the name given to a theoretical concept describing the effect of monetary policy measures on the lending behaviour of banks. The credit channel encompasses the banking channel, which primarily focuses on (cost-related, profit-related and risk-related) restrictions on loan supply, and the balance sheet channel, which emphasises the loss of value of (potential) loan collateral.

A credit crunch is a macroeconomic situation in which banks restrict their credit supply in such a general way as to impair the loans usually granted to a country’s economy and cause a major economic risk. A credit crunch can stem from banks suddenly considering the risk of borrower default to be higher, for instance due to a sharp economic downturn in a country, or by banks in a country being so heavily indebted that they can no longer procure funds to finance loans.

Credit default risk (also known as counterparty risk or counterparty credit risk) describes the risk to which a bank is exposed when it grants a loan. The risk here is that a borrower may fail to make principal and interest payments on time or, indeed, at all, thereby defaulting on their loan. The worse the borrower’s economic situation, the higher the default risk. Banks seek to minimise the risk by very carefully examining who they lend to. They must also meet legal requirements by establishing capital buffers to cover any losses arising from credit defaults

A credit default swap (CDS) is a kind of insurance against the risk of credit default. Upon conclusion of a credit default swap agreement, the protection seller pledges himself to pay compensation to the protection buyer if a specified credit event occurs (e.g. default or late payment). In return, the protection seller receives a premium. The amount of the CDS premium depends primarily on the creditworthiness of the reference debtor, the definition of the credit event and the term of the contract.

Credit derivatives are a financial instrument which separate the credit risk from an underlying financial transaction, enabling the credit risk to be transferred to (other) investors. Investors thus assume the risk of the underlying loan defaulting; in return, they receive a premium. The most commonly used credit derivatives are credit default swaps. Developed markets for transferring credit risks can help stabilise to the international financial system. As a rule they increase market transparency as they enable credit risk to be traded thus ensuring a more reliable assessment of these risks.

A payer uses a credit transfer to instruct his or her bank to transfer a certain amount from his or her account to the payee's account. This can be done using bank forms, by telephone, using a special terminal or via online banking.

A credit-linked note is a security whose redemption amount depends on contractually agreed credit events (e.g. the default of a reference asset). Unlike a credit default swap (CDS), where the protection buyer receives a compensation payment if a specified credit event occurs, with a CLN the protection payment is made in advance. This, in turn, decreases the redemption amount if the credit event occurs.

A creditor is someone who is entitled, within a contractual relationship (e.g. purchase agreement, loan agreement), to require the debtor to perform a particular obligation.

The creditor identifier (creditor ID) was introduced as part of the Single Euro Payments Area (SEPA) Direct Debit Scheme and denotes a special sequence of characters that uniquely identifies the payee - the direct debit creditor. Together with the mandate reference number, the creditor ID is provided to the payer before payment, so that they can check the authorisation to make the debit. In Germany, the Deutsche Bundesbank is responsible for issuing creditor IDs in conjunction with the German Banking Industry Committee. 

Creditworthiness is a measure of a debtor's ability to honour its payment obligations. Rating agencies and banks use multilevel rating scales to categorise borrowers by credit quality.

Cross-border payments include transactions between accounts where the payer and the recipient belong to different jurisdictions (e.g. different countries or currency areas). Cross-border payments are often more expensive, slower and less transparent than payments within a jurisdiction, mainly for legal and technical reasons. The G20 Roadmap for Enhancing Cross-border Payments initiated in 2020 aims to make further progress in removing these hurdles in international cross-border payments.

Cross-checking is the Eurosystem term used to describe a complementary approach to verifying information derived from the short to medium-term economic analysis and the medium to long-term monetary analysis carried out by the ECB. This approach serves to ensure that no information relevant to the assessment of medium-term price trends is overlooked; it also reduces the risk of policy errors caused by overreliance on a single indicator, forecast or model.

Crypto token are privately generated digital tokens, created and used in computer networks. They are purely digital and work on the basis of encryption technologies (cryptography). The most well-known and widely used crypto token is bitcoin. The frequently used term “cryptocurrency” has the ring of official money, but this is not actually the case. Crypto token are not backed by a public central bank, there is no legal basis and no government regulation to ensure stability and acceptance. This means that nobody can be obliged to accept a payment made using a crypto token. Similarly, there is no legal entitlement to exchange crypto token for an official currency. Crypto token fulfil the functions of money only to a very limited degree. In terms of use as a means of payment, acceptance is incredibly low. Crypto

This term refers to a country or territory’s monetary sovereignty including all the rules and regulations safeguarding price stability (monetary constitution). This explains why it also stands for the name of the unit of money (e.g. euro, US dollar, yen).

Currency appreciation is the increase in the value of one currency against another. If, for example, the euro appreciates against the dollar, then one euro buys more dollars than before. This dampens the export of goods and services because the domestic price of a good or service, converted into the foreign currency, becomes more expensive abroad. At the same time, appreciation stimulates the import of goods and services from abroad as it reduces their converted prices for the domestic market. In a fixed exchange rate regime, appreciation is subject to a decision by the participating governments. In a floating exchange rate regime, the value of a currency appreciates when its demand outweighs its supply.

A currency board is an exchange rate regime whereby the exchange rate of the domestic currency is pegged unilaterally to a foreign currency, such as to the US dollar or the euro. The main features of a currency board are that the exchange rate is set by law and that the domestic money supply is fully covered by foreign currency reserves. The central bank of the country in question does not pursue an independent monetary policy. By firmly pegging the domestic currency to an anchor currency, a currency board allows the credibility and stability of a foreign currency to be imported.

Currency depreciation is the decrease in the value of one currency against another. If, for example, the euro depreciates against the dollar, then one euro buys fewer dollars than before. This stimulates the export of goods and services because the domestic price of a good or service, converted into the foreign currency, becomes cheaper abroad. At the same time, depreciation dampens the import of goods and services from abroad as it increases their converted prices for the domestic market. In a fixed exchange rate regime, depreciation is subject to a decision by the participating governments. In a floating exchange rate regime, the value of a currency depreciates when its supply outweighs demand on the foreign exchange market.

Currency parity means defining the value of a currency against a yardstick, which may deviate from the actual exchange rate in the market. Examples of parity are a set rate of exchange between a currency and gold (gold parity), between two currencies (e.g. dollar parity) or between a currency and an artificial accounting unit (e.g. ECU parity).

Currency reform is the fundamental reordering of a country's monetary system, by which a new currency is introduced. Unlike a currency conversion, a currency reform leads to a change in the value of money and the purchasing power per monetary unit. In the three western zones of occupied Germany in 1948, a currency reform was implemented, replacing the almost worthless Reichsmark with the Deutsche Mark.

The current account is a component of the balance of payments. It consists of trade in goods (1), trade in services (2), primary income (3) and secondary income (4). A current account surplus means that the relevant economy is producing more than its consumption of domestic and foreign goods. The economy thus accumulates external assets. In a current account deficit, the situation is reversed.

A current account credit is a loan issued via a current account. It can be used by a borrower as and when it is necessary within an agreed framework. Interest is charged in line with the amount of credit extended and the period of time for which it is given. Overdraft facilities for retail and corporate customers are a prime example of current account credit.