securities lending business

100 Loan 100 Securities other than shares

100 Cash 100 Securities other than shares

Equity capital 1.1.1.1 .

Equity capital 1.2.1.1 .

Standard 5 Securities lending Securities lending and borrowing ( or repurchase agreements and other economically equivalent transactions ) should be encouraged as a method for avoiding settlement failures and expediting the settlement of securities .

The arrangements for securities lending should be sound , safe and efficient .

Income on equity 2.1.1.1 .

Income on equity 2.2.2 .

Chart A Euro area MFIs main asset holdings by sector ( excluding shares and other equities ) ( three month flows

TARGET2 a new generation of the TARGET system in which the current decentralised technical structure will be replaced by a single shared platform offering a harmonised service with a uniform pricing scheme .

More specifically , budgetary positions close to balance or in surplus are required as the medium term objective for Member States . Standing facility a central bank facility available to counterparties on their own initiative .

Systemic risk the risk that the inability of one participant to meet its obligations in a system will cause other participants to be unable to meet their obligations when they become due , potentially with spillover effects ( e.g. significant liquidity or credit problems ) threatening the stability of or confidence in the financial system .

Liquidity risk the risk that a counterparty will not settle an obligation at its full value when due but on some unspecified date thereafter .

Executive Board one of the decision making bodies of the European Central Bank ( ECB ) .

Implied volatility the expected volatility ( i.e. standard deviation ) in the rates of change of the price of an asset ( e.g. a share or a bond ) .

Equity and reinvested earnings 1.1.1.1 .

Equity and reinvested earnings 1.2.1.1 .

Equity and reinvested earnings 1.1.1.1 .

Equity and reinvested earnings 1.2.1.1 .

1 ) Securities issued by international and supranational institutions are not included .

Portfolio investment Equity securities Debt securities Bonds and notes Money market instruments III .

The MFI owns a loan and sells it to the FVC which finances the purchase via the issue of securities backed by the loan .

The share of a syndicate member institution in a syndicated loan is considered an eligible type of credit claim .

In the case of security lending transactions , the securities shall remain on the balance sheet of the transferor .

The MFI owns a loan and sells it to the FVC , which finances the purchase via the issue of securities backed by the loan .

The debtor finances this repayment of the loan out of the proceeds arising from the issue of securities ( 2 ) .

The debtor finances this loan repayment out of the proceeds arising from the securities issue ( 1 ) .

The MFI receives a new asset ( cash or securities ) for the sale of the loan .

The MFI receives a new asset , cash or securities , for the sale of the loan .

Income on equity Income on debt ( interest ) 2.2.2.1 .

Foreign exchange swap simultaneous spot and forward transactions exchanging one currency against another .

European System of Accounts 1995 ( ESA 95 ) a system of uniform statistical definitions and classifications aimed at achieving a harmonised quantitative description of the economies of the Member States .

That inability to meet obligations can be caused by operational or financial problems .

Barriers that inhibit the practice of lending securities for this purpose should be removed .

Direct investment Abroad Equity and reinvested earnings Other capital In the reporting economy Equity and reinvested earnings Other capital Step 3 Step 3 Step 3 Step 3 Step 3 Step 3 II .

I. Direct investment Abroad Equity and reinvested earnings Other capital In the reporting economy Equity and reinvested earnings Other capital II .

Step 1 the loan is sold to the FVC in exchange for securities issued by the FVC MFI A L A

Step 1 The loan is sold to the FVC in exchange for securities issued by the FVC

Abroad 1.1.1 Equity and reinvested earnings 1.1.1.1 .

A final commonly used classification is between the form of the financial instrument ( equity or debt market ) .

If , however , securities borrowed by the reporting entity acting as the transferee , are not kept in its custody account at the year end , the transferee shall establish a provision for losses if the market value of the underlying securities has risen since the contract date of the lending transaction .

Securities acquired under reverse repurchase agreements shall not be revalued and no profit or loss arising thereon shall be taken to the profit and loss account by the reporting entity lending the funds .

Portfolio investment Equity securities Debt securities Bonds and notes Money market instruments Step 3 Step 3 Step 3 Step 3

Shares , stocks , preferred stock or shares , participation , or similar documents usually denote ownership of equity .