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Acquis communautaire
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The Acquis communautaire is the entire body of European legislation, including all the treaties, regulations and directives adopted by the European Union and the rulings of the European Court of Justice. The acquis is constantly evolving and includes:
- the content, principles and political objectives of the Treaties on which the Union is founded;
- legislation and decisions adopted pursuant to the Treaties, and the case law of the Court of Justice;
- other acts, legally binding or not, adopted within the Union framework, such as inter-institutional agreements, resolutions, statements, recommendations, guidelines;
- joint actions, common positions, declarations, conclusions and other acts within the framework of the common foreign and security policy;
- joint actions, joint positions, conventions signed, resolutions, statements and other acts agreed within the framework of justice and home affairs;
- international agreements concluded by the Communities, the Communities jointly with their Member States, the Union, and those concluded by the Member States among themselves with regard to Union activities.
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Adjustment program
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A detailed economic program, usually supported by use of IMF resources, that is based on an analysis of the economic problems of the member country and specifies the policies implemented or that will be implemented by the country in the monetary, fiscal, external, and structural areas, as necessary to achieve economic stabilization and set the basis for self-sustained economic growth.
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Allocation
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An SDR allocation is a low cost way of adding to members' international reserves, allowing members to reduce their reliance on more expensive domestic or external debt for building reserves. The IMF has the authority under its Articles of Agreement to create unconditional liquidity through "general allocations" of SDRs to participants in its SDR Department (currently, all members of the IMF) in proportion to their quotas in the IMF. Three general allocations and a special one have been made during the time, bringing the total cumulative allocations to about SDR 204 billion.
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Article IV Consultation
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A regular, usually annual, comprehensive discussion between the IMF staff and representatives of individual member countries concerning the member's economic and financial policies. The basis for these discussions is in Article IV of the IMF Articles of Agreement (as amended, effective 1978) which direct the Fund to exercise firm surveillance over each member's exchange rate policies.
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Bank of International Settlements (BIS)
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Established in 1930 in Basel, the BIS is the world's oldest international financial organization whose aim is to foster international monetary and financial cooperation and which serves as a bank for central banks.
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Black Sea Trade and Development Bank (BSTDB)
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The BSTDB is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. The Bank supports economic development and regional cooperation by providing trade and project financing and guarantees and equity for development projects supporting both public and private enterprises in its member countries.
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Bretton Woods (Conference)
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The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of all 45 Allied nations in 1944 in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the conclusion of World War II and the agreements were signed to set up the International Bank for Reconstruction and Development (IBRD), and the International Monetary Fund (IMF). As a result of the conference, the Bretton Woods system of exchange rate management was set up, which remained in place until the early 1970s.
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Central bank independence
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The legal provision which guarantees that a central bank can carry out its tasks and duties without political interference. Article 130 TFEU establishes the principle of central bank independence for the euro area.
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Central bank
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An institution which - by way of a legal act - has been given responsibility for conducting the monetary policy for a specific area.
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Conditionality
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Economic policies that members intend to follow as a condition for the use of IMF resources. These are often expressed as performance criteria (for example, monetary and budgetary targets) or benchmarks, and are intended to ensure that the use of IMF credit is temporary and consistent with the adjustment program designed to correct a member’s external payments imbalance.
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Constituency
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The IMF and World Bank member countries are represented by 24 Executive Directors, out of which five are appointed (US, Japan, Germany, France, and the United Kingdom), and a further three represent a single country (Saudi Arabia, Russia, and the People’s Republic of China). The remaining sixteen are elected by groups of countries, called “constituencies”. These groups range in size from the four-country constituency to the twenty-four country constituency.
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Convergence criteria
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The four criteria set out in Article 140(1) TFEU that must be fulfilled by each EU Member State before it can adopt the euro, namely a stable price level, sound public finances (a deficit and a level of debt that are both limited in terms of GDP), a stable exchange rate and low and stable long-term interest rates. In addition, each EU Member State must ensure the compatibility of its national legislation, including the statutes of the national central bank, with both the TFEU and the Statute of the European System of Central Banks and of the European Central Bank.
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Copenhagen criteria (accession criteria)
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The criteria defined by the Copenhagen European Council in June 1993 (and confirmed by the Madrid European Council in December 1995) that must be fulfilled by any country wishing to join the European Union. Included are political criteria (stable institutions guaranteeing democracy, the rule of law, human rights and respect for minorities), economic criteria (a functioning market economy) and the incorporation into national law of the acquis communautaire.
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Council of the European Union (EU Council)
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An EU institution made up of representatives of the governments of the Member States, normally the ministers responsible for the matters under consideration. The EU Council meeting in the composition of the ministers of economics and finance is often referred to as the "Ecofin Council". For decisions of particular importance, the EU Council meets in the composition of the Heads of State or Government.
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Court of Justice of the European Union (Court of Justice)
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The EU institution that rules on the interpretation and application both of the TFEU and of the legal acts laid down by other EU institutions. Following the Treaty of Lisbon, the Court includes the Court of Justice, the General Court (previously the Court of First Instance) and specialised courts.
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Development Policy Lending (DPL)
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Policy-based lending: Provision of untied donor resources directly through the government’s budget, using the government’s own financial management, procurement, auditing, and implementation processes and systems. This lending is based on a set of policy or institutional reforms (termed conditionality when set out ex-ante in a multi-tranche operation, or prior actions when identified ex post in a single tranche operation). The World Bank’s term for policy-based lending is Development Policy Lending (DPL).
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EU Member State
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A country that is a member of the European Union.
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EU enlargement
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The European Union currently has 27 Member States. In addition to the first six Member States of the EEC — Belgium, France, Germany, Italy, Luxembourg and the Netherlands — 21 further countries are now members of the Union. These are: Denmark, Ireland and the United Kingdom (1973); Greece (1981); Spain and Portugal (1986); Austria, Finland and Sweden (1995); the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (2004); Bulgaria and Romania (2007). Croatia, the Former Yugoslav Republic of Macedonia, Turkey and Iceland have the status of candidate countries.
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Economic and Financial Committee (EFC)
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A consultative EU body set up at the start of Stage Three of Economic and Monetary Union (EMU). The Member States, the European Commission and the ECB each appoint no more than two members of the Committee. Each Member State selects one member from among the senior officials of its national administration, and the second member from among the senior officials of its national central bank. However, the national central bank members only participate in EFC meetings when issues of their institution's particular expertise or competence are being discussed. Article 134(2) of the TFEU contains a list of the tasks of the Economic and Financial Committee.
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Economic and Monetary Union (EMU)
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The outcome of the process laid down in the Treaty establishing the European Community for harmonisation by EU Member States of economic and monetary policies and for introduction of the euro. Three stages were provided for: Stage One (1 July 1990 to 31 December 1993), removal of barriers to free movement of capital within the EU, better coordination of economic policies and closer cooperation between central banks, Stage Two (1 January 1994 to 31 December 1998), establishment of the European Monetary Institute (EMI) followed by preparations for introduction of the euro, avoidance of excessive deficits and enhanced convergence of policies (to ensure stable prices and sound public finances). Stage Three (from 1 January 1999) began with irrevocable fixing of exchange rates, transfer of monetary competence to the ECB and the introduction of the euro. The TFEU no longer refers to the three stages of EMU, as this progressive terminology is outdated.
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Emerging markets
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The capital markets of developing countries that have liberalized their financial systems to promote capital flows with nonresidents and are broadly accessible to foreign investors. Originally coined in the 1980s by then World Bank economist Antoine van Agtmael, the term is sometimes loosely used as a replacement for emerging economies, but really signifies a business phenomenon that is not fully described by or constrained to geography or economic strength; such countries are considered to be in a transitional phase between developing and developed status. Examples of emerging markets include China, India, Brazil, Mexico, some countries in Southeast Asia, most countries in Eastern Europe, Russia, and some countries in the Middle East
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Euro area
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The area encompassing the EU Member States whose currency is the euro and in which a single monetary policy is conducted under the responsibility of the Governing Council of the ECB. It currently comprises Belgium, Germany, Greece, Spain, France, Ireland, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
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Euro
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The name of the European single currency adopted by the European Council at its meeting in Madrid on 15 and 16 December 1995.
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Eurogroup
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An informal gathering of the ministers of economics and finance of the euro area member countries, at which they discuss issues connected with their shared responsibilities in respect of the single currency. The European Commission and the ECB are invited to take part in the meetings. The Eurogroup usually meets immediately before an Ecofin Council meeting.
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Europe 2020 strategy for growth and jobs
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Europe 2020 is the European Union's new strategy for smart, sustainable and inclusive growth and jobs launched by the European Commission on 3 March 2010 in order to go out of the crisis and prepare EU economy for the next decade.
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European Bank for Reconstruction and Development (EBRD)
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The EBRD is an international financial institution that supports projects in 29 countries from central Europe to central Asia. Investing primarily in private sector clients whose needs cannot be fully met by the market, the Bank promotes entrepreneurship and fosters transition towards open and democratic market economies.
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European Central Bank (ECB)
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The ECB was established on 1 June 1998 in Frankfurt am Main as the body at the centre of the European System of Central Banks (ESCB) and the Eurosystem. Together with the national central banks of the EU Member States whose currency is the euro, the ECB defines and implements the monetary policy for the euro area. Since the entry into force of the Treaty of Lisbon on 1 December 2009, the ECB has been an EU institution.
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European Commission
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The EU institution established in 1967 (for the then three European Communities) that drafts proposals for new EU legislation (which it presents to the European Parliament and the EU Council for adoption), makes sure that EU decisions are properly implemented and supervises the way EU funds are spent. Together with the Court of Justice of the European Union, it ensures that legislation applying to all EU Member States is properly implemented and that the provisions of the TFEU are applied in full.
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European Council
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An EU institution that brings together the Heads of State or Government of the EU Member States and the President of the European Commission to provide the European Union with the necessary impetus for its development and to define the general political guidelines thereof.
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European Economic Area (EEA)
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A free-trade area encompassing EU Member States and Iceland, Liechtenstein and Norway.
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European Monetary System (EMS)
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An exchange rate regime established in 1979 to foster closer monetary policy cooperation between the central banks of the Member States of the European Economic Community (EEC) so as to lead to a zone of monetary stability in Europe. The main components of the EMS were the ECU (a basket currency made up of the sum of fixed amounts of currencies of EEC Member States), the exchange rate and intervention mechanism (ERM) and various credit mechanisms. It was replaced by ERM II (exchange rate mechanism II) at the start of Stage Three of Economic and Monetary Union (EMU) on 1 January 1999.
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European Parliament
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An EU institution that currently consists of 736 directly elected representatives of the citizens of the Member States. It plays a role in the EU's legislative process, although with differing prerogatives that depends on the procedures through which the respective EU legislation is to be enacted. Where monetary policy and the ESCB are concerned, the powers of the European Parliament are mainly consultative in character, although the TFEU provides for certain procedures with respect to the democratic accountability of the ECB vis-à-vis the Parliament (presentation of the ECB's Annual Report, including a general debate on monetary policy, and hearings before the competent parliamentary committees).
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European System of Central Banks (ESCB)
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The central banking system of the European Union. It comprises the ECB and the national central banks of all EU Member States (but the national central banks of EU Member States whose currency is not the euro are not involved in the conduct of the Eurosystem's monetary policy because they retain responsibility for monetary policy under national law).
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European Union (EU)
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The European Union was established by the Treaty on European Union (Maastricht, 1992).
The Union is a form of legal organisation consisting of three pillars:
- the first corresponding to the European Community;
- the second comprising the common foreign and security policy (CFSP) and the European security and defense policy (ESDP);
- the third consisting of police and judicial cooperation in criminal matters.
The Union is founded on values: respect for human dignity, liberty, democracy, equality, the rule of law and human rights.
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Eurosystem
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The central banking system of the euro area. It comprises the ECB and the national central banks of those EU Member States whose currency is the euro.
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Excessive deficit procedure
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The provision set out in Article 126 TFEU and specified in Protocol No 12 on the excessive deficit procedure requires EU Member States to maintain budgetary discipline, defines the criteria for a budgetary position to be considered an excessive deficit and regulates steps to be taken following the observation that the requirements for the budgetary balance or government debt have not been fulfilled.
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Exchange rate mechanism II (ERM II)
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The exchange rate arrangement established on 1 January 1999 that provides a framework for exchange rate policy cooperation between the Eurosystem and EU Member States whose currency is not the euro. Although membership in ERM II is voluntary, Member States with a derogation are expected to join. This involves establishing both a central rate for their respective currency's exchange rate against the euro and a band for its fluctuation around that central rate. The standard fluctuation band is ±15%, but a narrower band may be agreed on request.
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Executive Board of the ECB
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One of the decision-making bodies of the ECB. It comprises the President and the Vice-President of the ECB and four other members, all of whom are appointed by common accord by the Heads of State or Government of the EU Member States whose currency is the euro.
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Extended Credit Facility (ECF)
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Extended Credit Facility provides financial assistance to countries with protracted balance of payments problems. The ECF was created as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of low income countries, including in times of crisis. The ECF succeeds the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for providing medium-term support low income countries, with higher levels of access, more concessional financing terms, more flexible program design features, as well as streamlined and more focused conditionality.
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Financial Sector Assessment Program (FSAP)
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The FSAP, a joint IMF and World Bank effort introduced in May 1999, aims to increase the effectiveness of efforts to promote the soundness of financial systems in member countries. Supported by experts from a range of national agencies and standard-setting bodies, work under the program seeks to identify the strengths and vulnerabilities of a country's financial system; to determine how key sources of risk are being managed; to ascertain the sector's developmental and technical assistance needs; and to help prioritize policy responses.
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Financial System Stability Assessment (FSSA)
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The FSSA is a report based on the work of the joint IMF-World Bank Financial Sector Assessment Program missions in which IMF staff address issues of relevance to IMF surveillance, including risks to macroeconomic stability stemming from the financial sector and the capacity of the sector to absorb macroeconomic shocks.
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G20
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The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy. The G20 members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, United Kingdom, United States of America. The European Union, who is represented by the rotating Council presidency and the European Central Bank, is the 20th member of the G20.
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G8
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The G8 is a forum for discussions, created by France in 1975, for governments of six countries in the world that represent the world’s major industrialized democracies: France, Germany, Italy, Japan, the United Kingdom, and the United States. In 1976, Canada joined the group (thus creating the G7). In becoming the G8, the group added Russia in 1997. In addition, the European Union is represented within the G8, but cannot host or chair.
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General Council of the ECB
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One of the decision-making bodies of the ECB. It comprises the President and the Vice-President of the ECB and the governors of the national central banks of all EU Member States.
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General Data Dissemination System (GDDS)
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The Fund's work on data dissemination standards began in October 1995, when the Interim Committee (now the International Monetary and Financial Committee or IMFC) endorsed the establishment by the Fund of standards to guide members in the dissemination to the public of their economic and financial data. Those standards were to consist of two tiers: the General Data Dissemination System (which would apply to all Fund members), and the Special Data Dissemination Standard.
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Globalization
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Globalization describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.
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Governing Council of the ECB
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The supreme decision-making body of the ECB. It comprises the President and the Vice-President of the ECB plus the other members of the Executive Board and the governors of the national central banks of those EU Member States whose currency is the euro.
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International Bank for Reconstruction and Development (IBRD)
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The International Bank for Reconstruction and Development (IBRD) aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Established in 1944 as the original institution of the World Bank Group, IBRD is structured like a cooperative that is owned and operated for the benefit of its 186 member countries.
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International Centre for Settlement of Investment Disputes (ICSID)
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ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States with over one hundred and forty member States. The Convention sets forth ICSID's mandate, organization and core functions. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes.
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International Development Association (IDA)
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The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people’s living conditions.
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International Financial Corporation (IFC)
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IFC is a member of the World Bank Group. IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments.
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International Monetary Fund (IMF)
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IMF is an international organization, based in Washington, D.C., with a membership of 186 countries (2010). It was established in 1945 to promote international monetary cooperation and exchange rate stability, to foster economic growth and high levels of employment and to help member countries to correct balance of payments imbalances.
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International Monetary Systems
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The International Monetary Systems are sets of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investment and generally the reallocation of capital between nation states. They provide means of payment acceptable between buyers and sellers of different nationality, including deferred payment. To operate successfully, they need to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade and to provide means by which global imbalances can be corrected. The systems can grow organically as the collective result of numerous individual agreements between international economic actors spread over several decades. Alternatively, they can arise from a single architectural vision as happened at Bretton Woods in 1944.
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Letter of intent (LOI)
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A document in which a member country of the IMF formally requests an arrangement to use the Fund's financial resources and describes its commitments to strengthen its economic and financial policies. The letter of intent is usually accompanied by a Technical Memorandum of Understanding.
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Member State with a derogation
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A Member State that is, as set out in Article 140 TFEU, preparing to adopt the euro. There are currently 9 Member States with this status: rights and obligations relating to the introduction of the euro as a single currency do not apply to them. The cases of Denmark and the United Kingdom are different in that these two Member States have been granted an exemption from participating in the third stage of Economic and Monetary Union.
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Memorandum of understanding (MOU)
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A memorandum of understanding is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. Central banks and financial international institutions could be subject of a MOU.
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Monetary policy interest rate
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The monetary policy interest rate is the interest rate on NBR’s main open-market operations. Currently, these are repo operations with a maturity of one week, executed in the form of tenders, at a fixed interest rate.
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Multilateral Investment Guarantee Agency (MIGA)
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As a member of the World Bank Group, MIGA's mission is to promote foreign direct investment into developing countries to help support economic growth, reduce poverty and improve people’s lives by providing political risk insurance (guarantees) to the private sector.
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National Central Bank (NCB)
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A central bank of an EU Member State.
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Organization for Economic Co-operation and Development (OECD)
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OECD was founded in Paris in 1961 and since then, its mission has been to help its member countries (30 in 2010) to achieve sustainable economic growth and employment and to raise the standard of living in member countries while maintaining financial stability – all this in order to contribute to the development of the world economy.
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Poverty Reduction and Growth Facility (PRGF)
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Established as the Enhanced Structural Adjustment Facility (ESAF) in 1987, enlarged and extended in 1994, and further strengthened in 1999 to make poverty reduction a key and more explicit element. The purpose of the facility is to support programs to strengthen substantially and in a sustainable manner balance of payments positions, and to foster durable growth, leading to higher living standards and a reduction in poverty. Eighty low-income countries are currently PRGF-eligible.
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Quota (IMF)
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Each member of the IMF is assigned a quota, denominated in SDRs, that is based broadly on the country's economic position relative to other members. The size of a country’s quota takes into accounts its GDP, current account transactions, and official reserves. Quotas determine members' capital subscriptions to the Fund, voting power, and the amount of financial assistance available to them from the Fund. Quotas are reviewed regularly, normally every five years.
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Reports on the Observance of Standards and Codes (ROSC)
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A key component of the FSAP, ROSCs summarize the extent to which countries observe certain internationally recognized standards and codes in areas such as accounting, auditing, anti-money laundering and countering the financing of terrorism, banking supervision, corporate governance, data dissemination, fiscal transparency, insolvency and creditor rights, insurance supervision, monetary and financial policy transparency, payments systems, and securities regulation. Reports summarizing countries' observance of these standards are prepared and published at the request of the member country.
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Special Data Dissemination Standard (SDDS)
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The SDDS was established by the International Monetary Fund to guide members that have, or that might seek, access to international capital markets in the provision of their economic and financial data to the public.
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Special Drawing Rights (SDR)
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International reserve asset created by the IMF in 1969 to supplement other reserve assets that are periodically allocated to IMF members in proportion to their respective quotas. The SDR is based on a basket of international currencies comprising the U.S. dollar, Japanese yen, euro and pound sterling.
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Stability and Growth Pact
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The Stability and Growth Pact consists of two EU Council Regulations, on "the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies" and on "speeding up and clarifying the implementation of the excessive deficit procedure", and of a European Council Resolution on the Stability and Growth Pact adopted at the Amsterdam summit on 17 June 1997. More specifically, budgetary positions close to balance or in surplus are required as the medium-term objective for Member States since this would allow them to deal with normal cyclical fluctuations while keeping their government deficit below the reference value of 3% of GDP. In accordance with the Stability and Growth Pact, countries participating in EMU will submit annual stability programmes, while non-participating countries will provide annual convergence programmes.
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Stand-by arrangement (SBA)
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A decision of the IMF by which a member is assured that it will be able to make purchases (drawings) from the General Resources Account (GRA) up to a specified amount and during a specified period of time, usually one to two years, provided that the member observes the terms set out in the supporting arrangement.
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Tranche
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A slice or segment, usually used as either "reserve tranche," the name given to a country's creditor position in the Fund, or as "credit tranche," a designation of the extent of a country's purchases (borrowing) from the Fund.
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Treaty of Lisbon
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The Treaty amending the Union’s two core treaties: the Treaty on European Union and the Treaty establishing the European Community. The Treaty of Lisbon was signed in Lisbon on 13 December 2007 and entered into force on 1 December 2009.
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Treaty on the Functioning of the European Union (TFEU)
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Following entry into force of the Treaty of Lisbon on 1 December 2009, the Treaty establishing the European Community was renamed the Treaty on the Functioning of the European Union (TFEU). This Treaty - referred to as the Treaty of Rome (signed in Rome on 25 March 1957) - entered into force on 1 January 1958 to establish the European Economic Community (EEC). The Treaty establishing the European Community was subsequently amended by the Treaty on European Union (often referred to as the Maastricht Treaty) signed on 7 February 1992 and entering into force on 1 November 1993, thereby establishing the EU. Thereafter, both the Treaty establishing the European Community and the Treaty on European Union were amended by the Treaty of Amsterdam, signed in Amsterdam on 2 October 1997 and entering into force on 1 May 1999, the Treaty of Nice, signed on 26 February 2001 and entering into force on 1 February 2003, and then by the Treaty of Lisbon.
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World Bank Group
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The World Bank Group includes two development institutions owned by 186 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Their work is complemented by that of the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and the International Centre for the Settlement of Investment Disputes (ICSID).
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World Trade Organization (WTO)
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WTO is an organization that intends to supervise and liberalize international trade. The organization officially commenced on 1995 and deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.
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