According to the methodology used within the national accounts, imports comprise all the goods and services which an economy obtains from 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.

Experience has shown that independent central banks are better able to ensure monetary stability. This independence guarantees that a central bank can carry out its tasks and duties without political interference. The independence of the Eurosystem and the ESCB is assured at several levels:

1. Institutionally: a comprehensive ban prohibits national and supranational bodies from giving instructions to the ECB or the national central banks.
2. Functionally: a central bank chooses the strategies and measures to achieve its objectives — primarily price stability — freely and on its own responsibility.
3. Financially: a central bank has free and independent access to its available financial resources. Moreover, national central banks are the sole shareholders of the ECB.
4. With regard to staff: the long tenures of members of governing bodies and their protection against arbitrary and premature dismissal contribute to the central banks' personnel independence.
   A country's central bank must have been granted independence upon entry into monetary union at the latest (legal convergence).

Exchange rates between two currencies can be quoted indirectly or directly. Indirect quotation states how many units of foreign currency you would receive for one unit of domestic currency (eg €1 = $1.37), whereas direct quotation states how much one unit of foreign currency costs in domestic currency units (eg $1 = €0.73). In foreign exchange trading, the international convention is to quote the euro against all other currencies using the indirect quotation method.

The term "inflation" is used to describe a persistent rise in price levels over several periods of time. When the price level increases, the purchasing power of money decreases because fewer goods and services can be bought for a given amount of money than before. Put differently, the real value of money, i.e. the value of money measured in units of goods, is falling as a result of inflation. In order to ensure price stability, the Governing Council aims for a 2% inflation rate over the medium term. The HICP, calculated by the Statistical Office of the European Union, is the measure of prices used by the Eurosystem to define and assess price stability in the euro area as a whole in quantitative terms.

Inflation targeting is a monetary policy strategy which seeks to achieve the end goal of price stability in a direct way. Intermediate goals, such as a certain annual growth rate in the money stock, are dispensed with. The basic ideas behind inflation targeting are twofold: first, to set the direction of monetary policy publicly by announcing a target value for the inflation rate, and, second, to take account of the uncertainties and time lags in the monetary transmission process by observing a range of data, and not just one intermediate target. Inflation targeting still works with the usual instruments of monetary policy, which have only an indirect effect on the level of prices.

An inflation-indexed bond is a debt security whose repayment value (as well as, in many cases, the amount of periodic interest payments) is linked to the development of a price index. Inflation-indexed bonds protect the bondholder against a loss of purchasing power as a result of inflation. Comparing yields on inflation-indexed and non-indexed paper with similar maturities issued by the same issuer can be used as a measure of inflation expectations in the capital market (the break-even inflation rate).

The effect of inflation on employment, the distribution of income and wealth, economic growth and general welfare. A distinction needs to be drawn between the effects of expected and unexpected price rises. A higher employment rate and lower unemployment can be achieved temporarily, if at all, through inflation, as long as the actual inflation rate is above the expected rate of price inflation which has already been factored into wage increases. However, as inflation expectations adapt to the actual inflation rate, inflation cannot cause a lasting increase in employment. Inflation also results in changes in the distribution of income and wealth. In general, an intensified, inflation-induced struggle for income shares disadvantages those sections of the population that do not have sufficient power to negotiate an increase in their nominal income, which would compensate for the price rises (pensioners and other benefit recipients). The real value of material assets is also generally less affected by inflation than financial assets. The associated "flight to tangible assets" hinders the formation of monetary capital and productive capital, leading to adverse effects on economic growth.

An initial public offering (IPO) is the initial listing of a company’s shares in an organised capital market. The main goal of an IPO is to raise new capital for the company. This is intended to finance future growth and reduce borrowing costs. An IPO is an expensive and time-consuming process that takes on average a year. In Germany, a company needs to be organised as a public limited company in order to be able to go public.

Instant payments are cashless payment transactions that are settled around the clock in real time. Unlike in existing retail payments, the money transferred is available to the payee immediately after the payment is sent. Up to now, payments have not usually been settled until the following banking day. Thanks to instant payments, this waiting time no longer applies, since payments are processed independently of banks’ operating hours, i.e. also at night or on weekends. Instant payments are possible for point-of-sale transactions at retail outlets as well as for credit transfers and direct debits. At present, there is no common European payment system for instant payments.

Clearing solutions already exist that enable payment messages to be transmitted in real time. At the end of 2018, Target Instant Payment Settlement (TIPS), a system for real-time settlement, was introduced in Europe and thus offers a further alternative to the settlement of instant payments.

An institutional investor is an institution that is active in the capital market, alongside private investors (retail investors). Institutional investors include banks, investment funds and insurance companies, and also public sector bodies. As institutional investors are able, because of their size, to issue large-scale purchase or sell orders, their investment decisions can often significantly influence events in the financial markets.

By means of the integrated analytical framework, the Governing Council of the European Central Bank receives the information for its monetary policy decisions, for which it evaluates all relevant factors. This also includes a review of the proportionality and potential side effects of its monetary policy. In doing so, it builds on the integrated analytical framework. This is composed of two interdependent analyses: first, economic analysis, and second, monetary and financial analysis. In this vein, interdependencies across the two analyses are taken into account. This is important because linkages between economic, monetary and financial developments play a key role in price stability.

The interbank market is the market in which banks trade with each other. Important tradeables are central bank money (liquidity), foreign exchange, securities and derivatives. Money trading – i.e. the short-term issuance or take-up of short-dated loans in central bank money on the money market – is an important segment of the interbank market.

Generally speaking, interest is the price for capital loaned for a time, and is paid to the lender by the borrower. The interest rate is usually quoted as a percentage per year. Typically, the longer the life of a loan, the higher the interest. Other determinants for the level of interest are the estimated default risk and the quality of any collateral, for example. The interest rate level provides information on the average level of the stated interest rates in the market for a specific period.

In very general terms, an interest margin is the difference between two interest rates. For example, a bank generally pays savers a lower rate of interest than it demands from borrowers. This difference between saving and borrowing interest is a source of income for banks.

However, for some time now the term interest margin (also net interest margin) has been used to describe an income component of banks. In this context, net interest income is set in relation to the balance sheet total (or interest-bearing assets). The interest margin calculated in this way is therefore not a pure interest rate difference, but is weighted with the volumes of the respective balance sheet items.

Net interest margin = (interest income - interest expenses)/balance sheet total.
 

Interest rate channel is the name given to a theoretical concept describing the direct and indirect effects of monetary policy measures on aggregate demand. Direct effects primarily refer to cost-of-capital effects. This theory states, for instance, that an increase in the key interest rate leads to an increase in lending rates. This, in turn, dampens demand for investment or consumer loans and, as a result, demand for capital and consumer goods. An increase in interest rates, which encourages more saving and, thus, reduces the incentive to spend on consumer goods, also has a dampening effect on aggregate demand. Indirect effects refer mainly to the substitution effect (shifts) with regard to portfolios. An investor's aim is always to achieve an optimal portfolio of financial and non-financial assets. Thus banks, enterprises and households regroup their assets and liabilities positions when interest rates change. This, too, has an impact on aggregate demand.

Interest rate risk is the risk of losses resulting from unexpected changes in market interest rates. Banks often issue long-term loans at fixed interest rates but are funded by short-term liabilities. As a result, interest costs associated with short-term funding change at a faster and more frequent rate than interest income from lending. Short-term refinancing becomes more expensive for banks whenever interest rates on the market rise. However, these costs cannot be passed on to the borrower if the borrowing rate has been fixed for a long-term period. Banks may see their profits dwindle or even turn into losses. In view of this, banks seek to predict future interest rates as accurately as possible and adjust their interest rates in line with expected developments.

In an interest rate swap, the two parties to the contract agree, at predetermined future points in time during a set period, to swap different interest payment streams arising on an underlying amount of money. Usually fixed interest payments are exchanged for variable interest payments. Interest rate swaps are used by banks to help them manage liquidity and risk.

An internal market is an area with common framework conditions for the production and sale of goods and for the allocation of the factors of production, thus giving rise to a uniform market (European single market).

International Accounting Standards are rules set by the International Accounting Standards Board (IASB) – an independent body of international accounting experts. The main purpose of the standards is to promote the quality, transparency and comparability – at an international level, too – of financial statements drawn up by various enterprises or by one enterprise for various periods. Publicly traded enterprises domiciled in the EU are required to prepare consolidated financial statements in accordance with International Accounting Standards. As the IASB is an international association under private law, its standards cannot be immediately legally binding. Each standard has to undergo a recognition procedure in order to become legally binding at EU level or in other countries. Prior to 1 April 2001, the body was called the International Accounting Standards Committee (IASC) and the rules that it issued were called International Accounting Standards (IAS). These rules are still valid and still bear the same name. Any rules published after this date are called International Financial Reporting Standards (IFRS).

The International Bank Account Number (IBAN) is an international standard for identifying account numbers that facilitates cross-border payments but is increasingly being used in domestic payments as well. It consists of up to 34 alphanumeric characters (22 in Germany); with the exception of the first four characters (country code and check digits), it has a different format in each country. An IBAN can thus explicitely be assigned to any account. Use of the IBAN is mandatory for SEPA credit transfers and direct debits in euro.

The international investment position is a statistical statement showing the value and composition of an economy’s (usually a country’s) claims on (assets) and liabilities towards the rest of the world at a specified point in time. The difference between a country's assets and liabilities shows whether it is a net debtor or a net creditor. There is a close connection between the balance of payments and the international investment position. While the balance of payments shows the changes in the international investment position per period (i.e. flows), the international investment position represents a snapshot of claims and liabilities at a given point in time (i.e. stocks).

The International Monetary Fund (IMF) is a special organisation of the United Nations in which 190 countries work together to foster cooperation in monetary policy, facilitate trade and secure a stable financial system. The aim of this organisation is to promote employment and growth and to reduce poverty. If a member country experiences solvency problems, the IMF can grant financial aid, which is generally dependent on certain criteria being met (conditionality). The IMF uses special drawing rights (SDRs) as its unit of account; a member country’s weighted vote is determined in accordance with its capital share. The IMF was established in 1945 and its headquarters are in Washington DC. The post of Managing Director is traditionally occupied by a European.

The international monetary system is the set of rules governing international cooperation in foreign exchange policy. Key elements of this set of rules relate to the regime of international payments and capital movements (convertibility), the basic means of determining exchange rates (exchange rate regime), the reserve currency (e.g. gold exchange standard) and, in the longer term, the provision of international liquidity by the participating nations.

The International Securities Identification Number (ISIN) is a code used to identify securities pursuant to ISO standard 6166. It is a twelve-character alphanumerical code to uniquely identify an exchange-traded security. It comprises a two-character country code followed by a nine-character national identification number and a single check digit. In Germany, the publishing company Wertpapier-Mitteilungen, Keppler, Lehmann GmbH & Co. KG is responsible for issuing valid ISIN codes. The ISIN was introduced in Germany in 2000 and was supposed to replace the previous German securities identification number (SIN) as of 2003. In practice, both the ISIN and the SIN continue to be used in parallel.

The International Swaps and Derivatives Association (ISDA) is an association that works in particular towards making trading in over-the-counter (OTC) derivatives more secure and stable. It has over 800 members including global and regional banks, asset managers, insurance corporations and supranational organisations. The ISDA has developed master agreements for derivatives trading. It can be called upon in contentious cases of insolvency and debt restructuring to establish whether credit default swaps have been triggered.

In the context of economic policy, regulatory intervention by an economic player such as the state in an area in which forces are otherwise freely at play. In monetary policy, the term foreign exchange intervention is used when, for instance, the central bank attempts to influence the exchange rate of a currency by buying or selling foreign exchange.

An investment bank is a bank that focuses not on lending and deposits but on other banking activities such as helping companies and public sector institutions to issue securities; trading securities, foreign exchange and all types of financial products; and advising companies on IPOs, mergers and acquisitions. The concept originates from the US banking system, where from the beginning of the 1930s to the end of the 20th century the law stipulated that investment banks must be separate from those engaging in lending and deposit business. This separate banking system differs from the continental European system of universal banks where large banks conduct virtually all types of banking activities.

An investment fund is a special fund managed by an investment company which is invested in assets such as shares, bonds or real estate. This special fund can also be invested in assets with their own particular set of risks (also known as alternative investments). Hedge funds and private equity funds are examples of such alternative investment funds (AIFs). Co-owners of fund assets each hold shares or units in the form of securities (mutual fund shares or investment fund certificates). By purchasing such instruments, investors can become co-owners of a – typically broadly diversified – portfolio at relatively low cost. Portfolios are broadly diversified in order to mitigate the risk of loss associated with the investment. There is a difference between retail funds, which are available to the general public and the shares of which are frequently exchange-traded, and specialised funds, which are created especially for institutional investors (e.g. pension funds).

The placement of new securities such as equity shares or debt securities by enterprises, banks or government. An issue of securities is generally intended to raise substantial volumes of funds and occurs mostly through public tender and auction of the securities to be issued.