E-money is a monetary value stored in electronic (including magnetic) form which is provided against payment of an amount of money. In legal terms, the value represents a claim against the issuer and can, for instance, be stored on the chip of a prepaid card or on a server. However, e-money is only considered as such if it is accepted as a means of payment by natural or legal persons other than the issuer. This implies that, for example, electronic gift cards, which can only be redeemed where they were issued, do not fall under the definition of e-money.

The corresponding legal provisions applicable to e-money and e-money business in Germany can be found in the Payment Services Oversight Act.

From a technical point of view, when a payment is made using e-money, the corresponding monetary value is electronically transferred from the payer’s storage medium to the payee. For payments using prepaid cards (such as the GeldKarte) at the point of sale, the e-money amount is deducted from the credit balance stored on the card and in most cases temporarily saved on the terminal or the retailer’s cash register system. Subsequently, several transactions are bundled and the amounts transferred to the payee using the corresponding payment systems.

E-money institutions are defined as institutions that issue e-money or, in other words, conduct e-money business, and are not covered by the provisions of section 1 (2) sentence 1 numbers 2 to 4 of the Payment Services Oversight Act. In Germany, e-money institutions are supervised by the Federal Financial Supervisory Authority (BaFin) and require written authorisation to conduct e-money business.

The Executive Board of the ECB comprises the ECB's President, Vice-President and four other members, all of whom are appointed by the European Council, acting by a qualified majority. Members of the Executive Board have a tenure of eight years and cannot be reappointed. The ECB Executive Board manages the ECB and the day-to-day business of the Eurosystem. All Executive Board members belong to the Governing Council.

The Governing Council of the European Central Bank (ECB) is the main decision-making body of both the ECB and the Eurosystem, and is notably responsible for formulating monetary policy in the euro area. It consists of the ECB's President and Vice-President, the four other members of the Executive Board as well as the governors of the national central banks of the euro-area countries. All members belong to the Governing Council in a personal capacity, i.e. they decide not as representatives of a given country or institution but based on their own personal judgement. The primary objective of the ECB Governing Council is to maintain price stability in the euro area. Normally convening twice a month, the Governing Council is chaired by the ECB President, who is its highest representative and spokesperson. Under the Treaty, EU policymakers can attend meetings of the ECB Governing Council but cannot vote on its decisions. Article 284 TFEU states that the President of the European Council (as well as a Commission member) can participate in Governing Council meetings and also raise certain topics, though it is common for the Eurogroup President rather than the Council President to attend. The Eurogroup President and a member of the European Commission can also attend meetings but have no voting rights.

The President of the European Central Bank (ECB) is the highest representative and spokesperson of both the ECB and the Eurosystem, and chairs the ECB's Executive Board, Governing Council and General Council. The ECB President is appointed by the European Council, acting by a qualified majority, for an eight-year tenure which is not renewable. The ECB President represents both the ECB and the Eurosystem in numerous international bodies.

The Eurosystem Collateral Management System (ECMS) will integrate the management of eligible collateral for Eurosystem monetary policy credit operations into a central technical platform will consolidate the 20 different national collateral management systems currently in place. The ECMS will largely supplant the nationally operated monetary policy collateral management applications. The Bundesbank will only use its national system for administering German credit claims, as before. In the future, monetary policy counterparties will receive access to the ECMS through a single gateway across all central banks and will benefit from a much simpler and more efficient procedure for mobilising collateral across borders. This gateway is identical for all TARGET services.ECMS does not change the fact, however, that national central banks remain responsible for their counterparties. This service is due to be launched until the first half of 2025.

The Ecofin Council (Economic and Financial Affairs Council) is composed of the Economics and Finance Ministers of the European Union member states as well as Budget Ministers when budgetary issues are discussed. It is the central body in the field of economic and fiscal policy for the EU member states and determines fundamental economic policy matters. The Finance Ministers of the euro-area countries make up the informal body known as the Eurogroup.

Economic activity refers to the cyclical upward and downward movements in the economy around the long-term growth trend. Real GDP is typically used as a measure for business cycle analysis. One full cycle from an upturn to a downturn to another upturn is called the economic or business cycle. Where an economy is positioned on the business cycle is often measured in terms of overall capacity utilisation (output gap).

Economic analysis is the technical term used by the Eurosystem to describe the first pillar of monetary policy analysis. The second pillar of this analytical framework is monetary analysis. Economic analysis focuses on assessing short to medium-term risks to price stability. Shorter-term movements in various real economic and financial indicators are analysed to identify tensions in the goods, services and factor markets that could lead to price rises (if demand exceeds supply). Here, economic analysis particularly seeks to assess the possible effects of economic shocks and structural trends (such as climate change and globalisation) that influence cost and price trends.

The Economic and Monetary Union (EMU) is the result of a treaty under which EU countries agreed to harmonise their economic and monetary policies. In June 1989, the European Council adopted a plan in Madrid to realise EMU in three stages. This plan became part of the Treaty on European Union ("Maastricht Treaty"), which came into effect in 1993. When Stage Three of Economic and Monetary Union began on 1 January 1999, the euro became the currency of the European Union and the European Central Bank's Governing Council assumed responsibility for monetary policy in the euro area. The Stability and Growth Pact took effect at the same time. However, the EU Member States have implemented the EMU to varying degrees to date. The euro has replaced the respective national currency in just 20 of the 27 member states. In response to the financial and sovereign debt crisis, the EU Member States have introduced a number of measures for the further development of economic and monetary union, including the European Semester and new regulations to strengthen the Stability and Growth Pact (known as the "six pack"). The terms European monetary union and European Economic and Monetary Union are sometimes also used.

Economic indicators (also known as short-term indicators) are used by the central bank and other economic agents as a basis for assessing the economic situation and as a tool for forecasting future economic performance and, in particular, the price outlook. They refer both to macroeconomic and sector-specific data and are also frequently cited in reports, financial statements, surveys and statistics on the world of economics, finance and trade. A wide range of such economic indicators form the backbone of monetary policy decisions made by the Governing Council of the European Central Bank. As part of its economic analysis, the Council focuses chiefly on economic indicators relating to the euro area, e.g. data on gross domestic product (GDP), domestic demand, production and sales in various sectors, survey-based indicators of business and consumer sentiment, the labour market, wage developments, investment, foreign demand, energy prices, the HICP and more. In exceptional circumstances like the coronavirus pandemic, quickly available, unconventional data such as internet search queries, mobility or payments data are also deployed.

In March 2020, the Federal Government adopted legislation establishing the Economic Stabilisation Fund. Its aim is to mitigate the economic impact of the COVID-19 (coronavirus) pandemic on enterprises in the real economy, which, if jeopardised, would have a considerable impact on Germany as a location for business and investment as well as its labour market. It should also help eliminate liquidity shortages, support refinancing in the capital market and strengthen enterprises’ capital bases. To this end, the Economic Stabilisation Fund works with government guarantees, direct government investments and the refinancing of special programmes from the KfW banking group (Kreditanstalt für Wiederaufbau). The fund will initially run until the end of 2021.

The European Currency Unit (ECU) was the European Union's official unit of account between 1979 and the end of 1998. It was used as a reference variable for the European Monetary System (EMS), for example, and as the sole denomination for all operations concerning the intervention and credit mechanism used within that system. The ECU was defined as a currency basket, containing fixed amounts of most of the EU currencies. When Stage Three of Economic and Monetary Union (EMU) began, the ECU was transformed into the euro at a conversion rate of 1:1.

Electronic cash is the system provided by the German banking industry for settling payments made by debit card (bank card). Since 2008, the electronic cash system and the German ATM system have operated under the new joint acceptance logo "girocard".

Eligible collateral is the term for assets that the Eurosystem accepts as collateral for its liquidity-providing operations. The Eurosystem requires banks to provide eligible collateral for all loans they receive from the central banks. If a bank is unable to repay a loan, the central bank could sell the collateral in the market and use the proceeds to balance out its lending losses.  The Eurosystem accepts a broad range of collateral, which is detailed in the single list of col-lateral. Within this collateral framework both marketable assets (e.g. debt securities) and non-marketable assets (e.g. credit claims) are accepted. Both types of asset must meet uniform credit standards.

Banks provide the Eurosystem with this collateral by either transferring ownership of the assets (repurchase agreement) or by pledging the assets as collateral (collateralised loan). The collateral can be used on a cross-border basis throughout the Eurosystem. In the Eurosystem, all eligible assets may be used on a cross-border basis by means of the correspondent central banking model (CCBM) and, in the case of marketable assets, through eligible links between securities settlement systems (SSSs) in the EMU.

The emerald number is a special security feature of the new Europa series of euro banknotes. It is a number at the bottom left of the obverse of the banknote. When the banknote is tilted, a band of light moves up and down. Depending on the angle it is viewed from, the colour of the number changes from emerald green to deep blue.

Emergency liquidity assistance (ELA) is a measure whereby a Eurosystem national central bank grants central bank money to a solvent financial institution that is experiencing temporary liquidity problems. As emergency liquidity assistance is not deemed to be part of single monetary policy, any resulting costs and risks are to be borne by the national central bank in question. Under Article 14.4 of the ESCB Statute, the ECB Governing Council can decide to restrict ELA operations if it finds, by a two-thirds majority of the vote cast, that these interfere with the objectives and tasks of the Eurosystem.

Publication of the euro overnight index average (EONIA) was discontinued as of 1 January 2022, and it was replaced by the €uro short-term rate (€STR). The EONIA has, since 1 October 2019, been calculated only as a spread – or difference – as compared to the €STR. Before October 2019, the EONIA was an average interest rate for unsecured overnight lending in euro interbank trading, which was calculated on the basis of actual transactions.

Equalisation claims are asset items that were created to stabilise the balance sheets of banks and business enterprises; they represent claims on general government. Equalisation claims may be needed as part of a currency changeover if assets and liabilities are not converted at the same ratio. These "artificial" assets were first required in Germany after the 1948 currency reform; they were also used following the 1990 currency union with the former German Democratic Republic (GDR). Equalisation claims were needed in 1948 because bank loans to the state had become worthless. Even after the currency reform, banks were still sitting on a substantial volume of deposits. This instrument was deployed again in mid-1990 to facilitate the currency union with the former GDR in order to plug the gap that had emerged between loans and deposits when the latter were converted, on average, at a more favourable rate. Banks were thereby compensated for worthless credits and provided with sufficient capital.

An enterprise's equity capital is calculated by deducting all its liabilities from its total assets. Equity capital encompasses all funds which the owners invest in a given enterprise as well as any earnings they reinvest. Such equity capital is permanently available to the enterprise in question and, in the event of losses, may be drawn upon in full to cover that company's liabilities. In the case of corporations, equity providers are not liable above and beyond this threshold, nor do they have any right to earn interest on or demand repayment of their invested capital. They are, however, entitled to a stake in the profits generated by the enterprise as well as to any revenues arising from a dissolution of the company.

The equity market is that part of the capital market in which equity shares are traded. Supply and demand determine equity prices in trading. In the past, equity traders met to trade equities at exchanges. Nowadays, a large proportion of equity trades are settled via electronic trading platforms operated by exchange companies. The prices of frequently traded equity shares vary throughout the day, even changing within a fraction of a second on some trading platforms.

An equity share is a security that securitises a shareholder’s stake in the share capital of a public limited company and the rights and obligations associated with that shareholding. The holder of an equity share – the shareholder – is a co-owner of the enterprise and is liable up to the amount of their capital contribution. In general, a distinction is made between ordinary shares and preferred shares. The holder of an ordinary share has the right to take part in the general meeting of the public limited company and exercise their right to vote. They also have a stake in the company’s profits, which are distributed in the form of dividend payments. Preferred shares, on the other hand, do not normally carry voting rights. In return, the holder receives dividends on a preferential basis and usually in a higher amount than for ordinary shares. By selling their equity shares on the secondary market, shareholders can offload their investment in a public limited company without this resulting in any equity capital being withdrawn from the enterprise.

The Statute of the European System of Central Banks and the European Central Bank is often referred to in short as the ESCB Statute. It is annexed to the Treaty on European Union and the Treaty on the Functioning of the European Union as a Protocol.

ESG is an umbrella term for the application of standards relating to environmental, social and governance criteria in business decisions. It is also used to refer to financial instruments, which fulfil these criteria (e.g. “ESG bond”).

ESG bonds are fixed-income securities designed to fund activities meeting certain environmental, social and governance criteria (ESG criteria). Green bonds, which are tied to environmental and climate criteria, play a prominent role in this category. Green bonds are thus a type of sustainable or ESG bonds.

Exchange-traded commodities (ETC) are exchange-traded securities whose value depends on individual commodities or commodity baskets and thus replicate the performance of underlying commodity indices. ETC allow investors to invest in the most important commodity groups. They are a modified form of exchange-traded funds (ETF) (investment in portfolios of shares and other asset classes) and are, in legal terms, usually debt securities with no maturity.

Investors therefore generally bear an issuer risk, i.e. the issuer of the debt securities can become insolvent. ETC exposed to usual market risks (e.g. crop yields, extraction volumes, policy developments) and can be subject to significant price fluctuations. They are collateralized, for example with gold or other collateral. ETC enable investors to participate in the performance of commodities without purchasing them directly and – like shares – can be purchased and sold continuously throughout the entire trading period. The maturity of ETC is unlimited and the costs are relatively low.

Exchange-traded funds (ETF) are investment funds traded on stock exchanges. ETF provide investors with the opportunity to invest in a broadly diversified portfolio of shares and other asset classes. In principle, they replicate the performance of a given index, such as the DAX for example. As a result, there are generally no active investment decisions, which means ETF involve lower operating costs, including, in particular, remuneration for fund management, than traditional investment funds.

The one-off costs for ETF are also significantly lower than for traditional funds. Unlike in the case of traditional investment funds, purchases and sales of ETF shares are not made directly with an investment company; instead, the shares are traded at the market rate on the stock exchange with comparatively low one-off costs. Nonetheless, ETF are subject to ordinary market risks and can experience significant volatility. Overall, the possibility of investing cost-efficiently in a diversified portfolio makes this a popular form of investment.

ETC (exchange-traded securities on individual commodities or commodity baskets) are a similar form.

EU Regulation on OTC derivatives, central counterparties and trade repositories

The Eurepo is the average interest rate for secured money market transactions in the euro area. To calculate this benchmark, a panel of contributing banks provide daily quotes of the highest rate on the market offered by one prime bank to another for funds in euro in exchange for certain collateral. Unlike the Euro Overnight Index Average (EONIA), the Eurepo is based not on actual transactions but on market observations. Eurepo rates are quoted for different maturities: 1 day, 1, 2 and 3 weeks and 1, 2, 3, 6, 9 and 12 months.

The euro is the common currency of the 20 countries participating in Stage Three of Economic and Monetary Union. It is divided into 100 cent. In Germany, the euro replaced the Deutsche Mark as the national currency on 1 January 1999 at the predefined exchange rate of DEM 1.95583 per euro. Initially the euro was only introduced as book money, then as cash from 1 January 2002. The euro exchange rate floats freely depending on supply and demand on the currency market. The euro is the second most important reserve currency in the world, after the US dollar.

The euro area comprises the countries which adopted the euro as their currency in Stage Three of Economic and Monetary Union. As of 1 January 2023, this includes 20 countries with around 345 million citizens: Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. 

The Euro Interbank Offered Rate (Euribor) is the average interest rate for unsecured euro term deposits. To calculate this benchmark, a panel of more than 30 contributing banks provide daily quotes of the highest rate offered by one prime bank to another for an unsecured euro term deposit. Unlike the Euro Overnight Index Average (EONIA), the Euribor is based not on actual transactions but on market observations. Euribor interest rates are calculated for term deposits of different maturities, including one week and 1, 3, 6 and 12 months. The European Money Markets Institute (EMMI), which is certified by the European Union for this purpose, is responsible for the calculation and administration. The Euribor is the key reference rate for a large number of loans, such as variable-rate mortgage loans. 

The Euro Overnight Index Average (EONIA) is a reference rate for the euro interbank overnight market calculated on the basis of actual transactions. A panel of around 30 banks each contribute daily data on the total volume of transactions in unsecured overnight money and the weighted average interest rate for this daily volume. The contributing banks report these data to the European Central Bank which in turn calculates a weighted average interest rate. The resulting EONIA is a key reference rate for banks, serving as an underlying for financial instruments such as EONIA swaps. The EONIA is gradually being replaced by the euro short-term rate (€STR) for all products and contracts.

The Euro Plus Pact was agreed upon in 2011 by the at that time 17 euro-area countries plus Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania to achieve greater growth and convergence. The countries agreed to make concrete commitments each year to national objectives and measures designed to promote competitiveness, employment, fiscal sustainability and financial stability. Establishing the pact aimed to provide a high level of political transparency and thus place pressure on the member states to actually implement the measures devised.

The €uro short-term rate (€STR) is a reference rate for unsecured overnight money in the euro area. It is calculated on the basis of money market statistics. To this end, around 50 reporting banks notify the ECB of their transactions in the money market – i.e. the market for central bank money – on a daily basis. In order to calculate the €STR, unsecured overnight borrowing transactions with all financial counterparties (e.g. banks, money market funds) are taken into account, and the volume-weighted average interest rate is calculated. The €STR is published at 8 a.m. on the next TARGET2 business day. The use of the EONIA as a reference rate was discontinued as of 1 January 2020, and it was replaced by the €STR. Other well-known reference rates are the EURIBOR, EUREPO, SOFR and SONIA.

EURO1 is a multilateral payment system for large-value payments denominated in euro which was launched by the European Banking Association (EBA) and is operated by EBA CLEARING. The participant banks are from the EU and other OECD countries; they all have at least one branch in the European Union via which they participate in the EURO1 system. The special feature regarding the settlement of payments is that all participant banks have a claim or obligation only vis-à-vis EURO1, but not vis-à-vis the other participants. EURO1 is classified as one of the Eurosystem's systemically important payment systems.

The Eurogroup is a forum in which the member states of the euro area coordinate their economic and fiscal policies, particularly with a view to strengthening the euro, their common currency. It comprises the finance ministers of the euro-area countries and usually meets the day before the Ecofin Council meeting. The President of the Eurogroup is elected by the group's members. The European Commission attends Eurogroup meetings and the European Central Bank is also invited.

The Europa series is the Eurosystem's technical term for the second series of euro banknotes with improved security features. The name Europa refers to the mythological figure of the same name, whose portrait appears in the watermark and hologram in this banknote series. Issuance of the Europa series of banknotes started with the €5 note on 2 May 2013. The other banknotes in the series will be introduced gradually over several years, in ascending order.

Europe 2020 is a growth strategy adopted by the European Council in 2010. A key aim of the strategy is to emerge stronger from the debt crisis in some euro area countries. The Europe 2020 strategy has five headline targets: more employment, more innovation, more climate protection and sustainability, more education and the reduction of poverty. The individual member states set concrete national targets and they will also implement structural reform strategies. Member states report on their progress in achieving these goals annually as part of the European Semester and then receive recommendations from the European Council.

The European Banking Authority (EBA), founded in 2011, is an EU regulatory agency headquartered in Paris. Its main tasks include the setting of standards for EU banking supervision, the development of a manual of harmonised supervisory practices and the execution of stress tests. The EBA is one of the three European Supervisory Authorities (ESAs).

The European Central Bank (ECB), based in Frankfurt am Main, became the monetary authority for the member states participating in the Stage Three of Economic and Monetary Union (EMU) when the euro was introduced at the beginning of 1999. It is one of the seven institutions of the European Union. The ECB's main decision-making body is the Governing Council, which consists of the six members of the Executive Board and the governors of the national central banks of the euro area countries. The Governing Council notably formulates monetary policy for the Eurosystem. In response to the financial and sovereign debt crisis, 2012 saw the ECB being assigned a leading role in European banking supervision (single supervisory mechanism, or SSM). The ECB and the national central banks of euro area countries make up the Eurosystem, while the ECB and the central banks of all EU member states form the European System of Central Banks (ESCB). The ECB President is the highest representative and spokesperson of both the ECB and the Eurosystem, representing both institutions in numerous international bodies.

The European Commission is a supranational institution of the European Union headquartered in Brussels. In some respects, it is similar to the government of a national state. It is, among other things, responsible for the implementation of political measures relating to the EU and its budget and, in conjunction with the Court of Justice of the European Union, for the enforcement of European laws. In addition, it draws up draft directives, regulations and other Community legislation and represents the Community's interests in business with national organisations and non-EU countries. Each EU member state sends a Commissioner to the EU Commission. One member of the Commission, nominated by the European Council, is elected President of the Commission by the European Parliament. In a similar way to a national government minister, each of the remaining Commissioners is responsible for a particular portfolio.

The European Council is the most important political body of the European Union. It comprises the heads of state or government of EU member states, the president of the European Council and the president of the European Commission. It defines the general political directions and priorities of the European Union, makes political policy decisions and provides the EU with the necessary impetus for its further development. It is to be distinguished from the Council of the European Union, which is made up of ministerial representatives of the governments of member states.

The European deposit insurance scheme (EDIS) is the third pillar of the nascent banking union, complementing the two other key elements already in place: the Single Supervisory Mechanism and the Single Resolution Mechanism. However, policymakers have postponed this initiative until further notice as no agreement could be reached regarding its exact design. Despite this fact, greater harmonisation among the various national deposit guarantee schemes (DGSs) has been achieved.

Since the beginning of 1994, the European Economic Area (EEA) has been an enhanced free trade area between the European Union and the European Free Trade Association (EFTA) – however, excluding Switzerland. In the European Economic Area, the rules enabling free movement (of goods, people, services and capital) valid in the European Single Market also apply to the EFTA member countries Iceland, Liechtenstein and Norway. Switzerland, although part of the EFTA, does not belong to the EEA; however, it is connected to the European Single Market by way of bilateral agreements.

The European Exchange Rate Arrangement was established in April 1972 by the governments of Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands. Under this arrangement, the exchange rates of the participating currencies were not allowed to deviate from the agreed central rates by more than 2.25%. Exchange rates were thus essentially pegged to one another, though they could fluctuate to a certain degree, hence the names "European currency snake" and "snake in the tunnel". The arrangement had a colourful history, with new members joining and others leaving, and central rates being realigned on a number of occasions. The European Exchange Rate Arrangement was replaced by the European Monetary System (EMS) in 1979.

The European Financial Stabilisation Mechanism (EFSM) is an additional source of funding for the EU Commission. It was founded by the EU member states in 2010 in response to the financial and sovereign debt crisis. The EFSM allows the European Commission to raise up to €60 billion in the capital market on behalf of the EU for lending – under strict conditions – to EU member states faced with exceptional circumstances beyond their control.

The European Financial Stability Facility (EFSF) was established as a temporary rescue measure by the EU member states in 2010 in response to the financial and sovereign debt crisis. The facility offered financial assistance to euro-area countries, provided they committed to certain reform programmes. The facility, with a guarantee line of €780 billion, was authorised to raise a maximum of €440 billion in the capital market through the issuance of securities. These securities are backed by guarantees made by the member states of the Euro area in proportion to their share in the capital of the ECB. The EFSF, which has now been replaced by the European Stability Mechanism, has not financed any new programmes since 1 July 2013, but continues to finance agreed programmes.

The European Fiscal Compact is the name given to the decision made by 25 EU states in December 2011 to increase their cooperation with regard to fiscal policy. A key component of the Fiscal Compact is the stipulation that general government budgets must be at least close to balance in structural terms. Although the Stability and Growth Pact includes very similar requirements, the Fiscal Compact is to enshrine them in national law ("debt brake"). Furthermore, an automatic correction mechanism is to be triggered if targets are missed significantly. Treaty on Stability, Coordination and Governance in the European Monetary Union (TSCG) Stability and Growth Pact.

The European Insurance and Occupational Pensions Authority (EIOPA) is an EU supervisory body established in 2011 and based in Frankfurt am Main. It is one of the three European Supervisory Authorities (ESAs).

The European Markets Infrastructure Regulation (EMIR; EU Regulation on OTC derivatives, central counterparties and trade repositories) of 2012 contains provisions governing over-the-counter trading of derivative products. Market participants are obliged to report all over-the-counter derivative transactions to a trade repository. Moreover, standardised derivative products must be cleared through a central counterparty (CCP). If a market participant carries out non-standardised derivative transactions, its risk management procedures are subject to more stringent requirements under EMIR.

The EMI, established in 1994, was a European institution tasked with coordinating national monetary policy in the European Union during Stage Two of European Economic and Monetary Union (EMU). The aim of this coordination was to achieve the convergence necessary for the transition to the Stage Three of EMU. The EMI was also designed to create the legal, institutional and organisational framework for a single European monetary policy in the Stage Three of EMU. EMI members comprised the central banks of the EU member states. On 1 June 1998, the EMI was replaced by the European Central Bank (ECB).

The European Monetary System (EMS) was the framework for monetary policy cooperation between European Union countries from 1979 to the end of 1998. Its aim was to create a "zone of stability" between the currencies of participating countries with essentially fixed but adjustable exchange rates. The EMS was built around the European Currency Unit (ECU), which was used both as a unit of account and reference variable for exchange rates and as a payment instrument and reserve currency for central banks. Participating countries set a central ECU rate for each currency which could then be used to determine the central rates for a given currency pair. Most exchange rates were allowed to fluctuate by up to 2.25% around their particular central rate, and central banks were obliged to safeguard these ranges by intervening in the forex market if need be. Central rates were realigned on numerous occasions to minimise the need for intervention. The EMS, which is sometimes known as Exchange Rate Mechanism I, was discontinued on 1 January 1999 with the advent of Stage Three of Economic and Monetary Union.

The European Parliament (EP) is the only institution of the European Union (EU) that is directly elected by EU citizens. In conjunction with the Council, the Members of the European Parliament pass EU laws, adopt the EU budget and control the executive. Elections to the EP are held every five years. Although the ECB is completely independent and must not be influenced by policy makers, it must report to the EP on monetary policy decisions in accordance with the basic democratic principles of accountability. The President of the ECB therefore reports to the Committee on Economic and Monetary Affairs every three months. As part of the ECB’s reporting obligations, the President also appears before the plenary session of the EP to present the ECB’s Annual Report, on which the EP usually adopts a resolution.

The European Payments Initiative (EPI) is a joint initiative set up by banks from a number of euro area countries. The EPI’s objective is, amongst other things, to introduce a proprietary European payment system application with the “Wero” application that was introduced in the summer of 2024.

The European Semester is an instrument for coordinating economic policy in the EU member states and has been used since 2010. The European Semester commences at the beginning of each year with a European Commission growth survey and ends six months later after detailed consultations with country-specific recommendations, endorsed by the European Council.

An area in which goods, services and people as well as capital and payments can move freely is known as a single market. The European Single Market is the joint market for the current 27 member states of the European Union; it has been known as such since the beginning of 1993. The European Single Market has approximately 500 million inhabitants; in terms of gross domestic product, it is the largest market in the world. The European Commission sees the European Single Market as a work in progress requiring further development such as, for instance, the mutual recognition and harmonisation of standards. Countries particularly connected to the European Single Market are Iceland, Liechtenstein and Norway (by way of the European Economic Area), Switzerland (by way of bilateral agreements) and Turkey (by way of a customs union). 

The European Stability Mechanism (ESM) is an intergovernmental financial institution headquartered in Luxembourg. It was established in response to the financial and sovereign debt crisis as a permanent crisis resolution mechanism and replaced the European Financial Stability Facility (EFSF), which had been set up as a temporary crisis resolution mechanism. The ESM provides financial aid to euro area countries where this is indispensable to preserve the financial stability of the euro area and its member states. These countries must temporarily experience or be threatened by serious financing problems. The ESM can use various tools to help them, such as the granting of loans or the purchase of sovereign debt. In return, the borrowing countries have to fulfil conditions. These should be suitable to remedy the problems that have arisen and be appropriate to the financial aid instrument chosen. The ESM has a total of 500 billion euros at its disposal for financial aid to the member states. The ESM refinances itself for the most part by issuing bonds. In order to enable the ESM to refinance itself on favourable terms, the euro countries have subscribed to a share capital of 700 billion euros (oversubscription), consisting of 80 billion euros in cash contributions and 620 billion euros in capital that can be called up as required. The finance ministers of the Euro countries represent the governments in the ESM Board of Governors and make all the important decisions. In Germany, there are also participation rights of the federal parliament.

The European Supervisory Authorities (ESAs) are three EU supervisory bodies established at the beginning of 2011. The ESAs include the European Banking Authority (EBA), which is responsible for banking supervision, the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA). The ESAs are responsible for microprudential oversight at the EU level. Together with the Joint Committee, the national supervisory authorities and the European Systemic Risk Board (ESRB), the ESAs form the European System of Financial Supervision (ESFS).

The European System of Accounts (ESA) is a system of uniform statistical definitions and classifications. The aim of the ESA is to provide comparable and reliable information on the structure and development of the economy in the countries and regions of the European Union.

The European System of Central Banks (ESCB) comprises the European Central Bank (ECB) and the national central banks (NCBs) of all EU member states, ie besides Eurosystem central banks, it also includes the national central banks of EU member states which have not (yet) adopted the euro. The ESCB's main governing body is the General Council (GC), which is made up of the ECB's President and Vice-President as well as the governors of the NCBs of all EU member states.

The European System of Financial Supervision (ESFS), which began operating at the beginning of 2011, aims to monitor the financial system from both a microprudential and a macroprudential perspective. The system consists of the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), the European Securities and Markets Authority (ESMA) and the European Systemic Risk Board (ESRB). The system also includes the Joint Committee of the European Supervisory Authorities and the competent supervisory authorities of the member states.

The European Systemic Risk Board (ESRB) is an independent EU body which is responsible for overseeing the financial system in the EU as a whole and for the timely identification of systemic risk (macroprudential oversight). The ESRB can issue warnings, making such warnings public where appropriate, and make recommendations. Based at the European Central Bank (ECB), the ESRB comprises representatives from the ECB, national central banks, supervisory authorities and the European Commission.

The European Union (EU) is an association of European states currently consisting of 27 members. Founded after the devastation of the Second World War, the main aim at the time was to promote a peaceful coexistence by forging targeted economic links and to prevent military conflicts in future. Today, the EU's objectives are to consolidate the internal market, to create a single monetary and foreign exchange policy and to foster increasing coordination of economic, social, foreign, defence, justice and internal security policies. The institutions of the EU are the European Parliament (elected by the people of the member states), the European Council (consisting of the heads of state and government of the EU member states, President of the European Council and President of the European Commission), the Council (consisting of the ministers of the EU member states), the European Commission (a supranational institution), the Court of Justice of the European Union, the European Central Bank and the European Court of Auditors.

Eurostat is the Statistical Office of the European Union based in Luxembourg. Its task is to generate statistics for the European Union, so that comparisons can be made between countries and regions.

The Eurosystem comprises the European Central Bank and the 20 national central banks of the EU member states that currently use the euro. It has sovereign power over monetary policy for the euro area countries. Its highest decision-making body is the Governing Council of the ECB. The primary objective of the Eurosystem is to safeguard price stability. When making monetary policy decisions, the Eurosystem is fundamentally independent from political interference (independence of the central bank). Alongside its main task of monetary policy, the Eurosystem also carries out joint foreign exchange transactions, promotes the smooth functioning of payment systems, manages reserve assets, issues euro banknotes and coins, generates statistics, and contributes to banking supervision and the stability of the financial system. 

Excess liquidity is the Eurosystem term used to refer to the highly liquid deposits that commercial banks hold on their central bank accounts which are in excess of minimum reserve requirements. Excess liquidity also includes funds that banks invest in the deposit facility. Provided the money market functions as it should, the Eurosystem supplies the banking system with central bank money such that there is effectively no excess liquidity and also no shortage of central bank money. Excess liquidity is remunerated at 0 % or the interest rate on the deposit facility if this is negative. Regardless of this, balances in the deposit facility always earn interest at the deposit facility rate.

An exchange is an organised market in which securities, foreign exchange or even commodities can be traded in accordance with certain rules. The prices of the items traded are determined continuously on the basis of supply and demand. 

Describes the rate of exchange between two currencies. In a flexible exchange rate regime, the exchange rate is derived from supply and demand. It can be expressed as a direct quotation or indirect quotation. Indirect quotation states how much foreign currency can be obtained for one unit of the domestic currency. Direct quotation states how much one unit of the foreign currency costs. All euro exchange rates are expressed in indirect quotation, e.g. €1 = US$1.40.

Exchange rate channel is the term given to a theoretical concept describing the effect of a monetary policy stimulus on exchange rates. For example, if a central bank raises its key interest rate because the price level is rising too quickly, the higher domestic interest rates attract more and more foreign monetary capital, causing the domestic currency to appreciate. This makes imports cheaper and curbs upward price pressures at home.

Exchange rate mechanism II (ERM II) is a regime of fixed exchange rates in which all EU countries wishing to adopt the euro as their currency must participate. Participating currencies can only fluctuate by a maximum of ± 15% around the central euro rate, although tighter fluctuation bands can also be agreed. To keep currencies within these fluctuation bands, the central banks in question can engage in essentially unrestricted foreign exchange market interventions, but these must not run counter to the aim of price stability. One of the convergence criteria for introducing the euro is that a candidate country must participate in the mechanism without tension for at least two years before it can qualify to adopt the euro. ERM II replaced the European Monetary System (known as EMS or ERM I) at the beginning of 1999.

In an exchange rate regime, the exchange rate for the participating currencies is determined according to standard principles. The basic forms are floating exchange regimes and fixed exchange regimes. In a floating exchange regime, exchange rates are formed esentially without government intervention, based on supply and demand on the foreign exchange market (e.g. determination of the euro/dollar exchange rate). In a fixed regime, exchange rates are determined based on agreements between the participating countries. Central banks must keep the exchange rate within a specific range of the predetermined rate by buying and selling foreign exchange. Exchange rate changes are made through "realignments", i.e. adjustment of the agreed central rates. Some countries peg the exchange rate of their currency to another currency unilaterally, i.e. with no contractual basis (currency board).

The Executive Board of the ECB comprises the ECB's President, Vice-President and four other members, all of whom are appointed by the European Council, acting by a qualified majority. Members of the Executive Board have a tenure of eight years and cannot be reappointed. The ECB Executive Board manages the ECB and the day-to-day business of the Eurosystem. All Executive Board members belong to the Governing Council.

The expectations channel is the name given to a theoretical concept describing the effect of monetary policy measures on the inflation expectations of banks and non-banks. For instance, a reduction in the key interest rate will not cause long-term interest rates in the capital market to decline as well if it is thought that the expansionary monetary policy will cause inflation to rise in future. In this case, investors will factor the expected higher inflation rates into the returns they expect to receive for providing debt capital over an extended period of time. Enterprises setting prices and social partners negotiating wages act in much the same way; that is, they do not respond to changes in the supply and demand conditions in the market but act pre-emptively, drawing on their expectations of future inflation rates based on past experience. Monetary policymakers can harness this behaviour if they have acquired a reputation for always decisively combatting inflation. After all, this would give economic agents no reason to factor higher future inflation rates into returns, prices and wages.

According to the methodology used within the national accounts, exports comprise all the goods and services which an economy transfers abroad within a given period of time. Goods are recorded in the trade balance and services are shown in the services account, both of which form part of the current account.

Der Rat der Europäischen Zentralbank (EZB-Rat; englisch: Governing Council, GC) ist das oberste Beschlussorgan der EZB und des Eurosystems. Er bestimmt insbesondere über die Geldpolitik im Euro-Währungsgebiet. Ihm gehören der EZB-Präsident, der EZB-Vizepräsident, die vier weiteren Mitglieder des EZB-Direktoriums sowie die Präsidenten bzw. Gouverneure der Zentralbanken der Länder des Euro-Währungsgebiets an. Alle Mitglieder gehören dem EZB-Rat "ad personam" an, das heißt, sie entscheiden nicht als Vertreter eines Staates oder einer Institution, sondern nach ihrem persönlichen Ermessen. Vorrangiges Ziel des EZB-Rats ist es, Preisstabilität im Euro-Währungsgebiet zu gewährleisten. Der EZB-Rat tagt normalerweise zweimal monatlich. Der EZB-Präsident leitet den EZB-Rat und ist sein oberster Repräsentant und Sprecher. Der Vertrag sieht vor, dass die Entscheidungsträger der EU an den Sitzungen des EZB-Rats teilnehmen können – allerdings ohne Stimmrecht. Nach Artikel 284 AEUV kann der Präsident des EU-Rats sowie ein Mitglied der Kommission ohne Stimmrecht an den Sitzungen des EZB-Rats teilnehmen und auch die Diskussion von bestimmten Themen anregen; in der Praxis nimmt der Präsident der Eurogruppe anstelle des Präsidenten des EU-Rats teil.