Annual Report 2004

Core inflation: inflation measure that excludes changes in selected components
from the underlying basket of goods and services. Energy and food are
factored out most frequently, given their volatile price development.
Credit risk: the risk of changes in customer creditworthiness affecting a
bankÕs assets.
Excessive deficit procedure: mechanism defined in Article 104 of the
TreatyandProtocolNo20ontheexcessivedeficitprocedurethatrequires
EU Member States to maintain budgetary discipline; the Stability and Growth
Pact substantially extended and accelerated the excessive deficit procedure
(EDP). It defines criteria for a budgetary position to be considered as an
excessive deficit and sets out the steps to be taken when a Member State
has not fulfilled the budget balance or government debt criteria. In line with
the conclusions of the European Council of March 22 and 23, 2005, the EDP is
scheduled to be amended in the course of 2005.
Exchange Rate Mechanism II (ERM II): exchange rate arrangement
that provides the framework for exchange rate policy cooperation between
the euro area countries and the EU Member States not participating in Stage
Three of Economic and Monetary Union (EMU). It specifies fluctuation bands
(up to a maximum of –15%) for the key interest rates of a currency against the
euro. Participation in ERM II for at least two years without severe tensions and
without a devaluation against the currency of another Member State is one of
the criteria a country has to fulfill to qualify for Stage Three of EMU.
IBAN: International Bank Account Number. Internationally agreed standard
to identify a customerÕs account at a financial institution; designed to replace
the combination e.g. of an account number and the financial institutionÕs
routing/transit code (Bankleitzahl) in Austria. The IBAN was developed by
the International Organization for Standardization (ISO) and the European
Committee for Banking Standards (ECBS) to assist error-free and smooth
processing of cross-border transactions. It is made up of the ISO country code,
check digits, a bank code and an account number.
Imported inflation: sustained rise in the general price level attributable
exclusively to inflationary pressures abroad.
Institutional analysis: thorough analysis of monetary developments in the
euro area based on information derived from many different statistical
sources, such as MFI balance sheet statistics, balance of payments data and
financial accounts data, which is carried out as part of the second pillar of
the monetary policy strategy of the European Central Bank (ECB).
Lamfalussy process: concept developed at the EU level by the Committee
of Wise Men, chaired by Baron Alexandre Lamfalussy, on the regulation of
European securities markets. In December 2002, the EU Council decided
to extend this approach to the entire financial sector. The four-level regulatory
approach aims at accelerating the legislative process of the EU, increasing
Glossary
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