Glossary

The write-down or conversion of a failing bank's liabilities, including depositors' balances above the guaranteed amount, to absorb losses.

A balance held at a commercial bank; legally a claim against the bank, not the same thing as cash.

The observation that newly created money benefits those who receive it first, changing relative prices and the distribution of wealth.

Government restrictions on moving money across borders or withdrawing it from banks.

Central bank digital currency: a digital form of central bank money for the public, such as the planned digital euro.

Cash and the reserves that banks hold at the central bank; the only money that is not a claim against a private institution.

An index of the US dollar against a basket of major currencies, widely used as a gauge of dollar strength.

State-issued money that is legal tender by law and not redeemable for a commodity, such as the euro or the US dollar.

A sustained rise in the general price level; equivalently, a fall in the purchasing power of money.

The availability of money and credit in an economy or market, as distinct from the market liquidity of a single asset.

Measures of how much money exists in an economy, from cash and sight deposits (M1) to broader liquid instruments (M3); definitions differ by currency area.

The interest rate a central bank sets for lending to or accepting deposits from banks; the anchor of all other rates in a currency.

What a unit of money actually buys; the quantity that inflation erodes.

A central bank's expansion or contraction of its balance sheet by buying or selling securities, changing the reserves in the banking system.

A nominal interest rate minus inflation; positive when saving in a currency gains purchasing power, negative when it loses.

The extra yield investors demand to hold a long-term bond rather than rolling over short-term ones.

The relationship between bond yields and their maturities for one issuer; its shape reflects expectations about growth, inflation and policy.