Annual Report 2004

Glossary
regulatory cooperation and convergence, and improving implementation and
enforcement. Essentially, the approach consists in a subdivision into broad
framework principles to be adopted in a codecision procedure by the Council
and the European Parliament and technical implementation measures to be
issued by the European Commission.
Macroprudential: refers to the thorough analysis at the systemic level of
banking and financial stability as well as to supervision at the macro level as
opposed to (microprudential) analysis and supervision of individual banks.
Market risk: the risk of financial market fluctuations (e.g. changes in interest
rates, stock prices or exchange rates) affecting a bankÕs assets and liabilities.
Money-holding sector: nonbanks resident in a monetary union as
opposed to banks, which are collectively defined as the money-issuing sector.
The objective of analyzing the transactions of nonfinancial economic agents is
to identify the determinants of money demand (money demand theory).
Off-site analysis: qualitative and quantitative evaluation of the (risk
management and balance sheet) data banks report to the Oesterreichische
Nationalbank and the Financial Market Authority (FMA) using a set of
different methods. The purpose of off-site analysis is to detect problematic
developments and initiate countermeasures as early as possible. See also onsite
inspection.
On-site inspection: thorough examination of individual banks, during
which supervisors largely work on the premises of a given bank. Credit
institutions are subject to review in particular relevant business areas so that
supervisors can add to the data reported by banks firsthand information in
as much detail as is required to assess the need for supervisory action. See also
off-site analysis.
Operational risk: the risk of bank losses resulting from inadequate internal
controls (misconduct or human error, breakdown of internal processes or systems)
or from external events.
Payment system: any set of payment instruments, banking procedures and
interbank transfer systems that ensure the circulation of money.
PEACH: Pan-European Automated Clearing House. Infrastructure for crossborder
credit transfers advanced by European banks under the SEPA initiative
for European retail payment services, which is to be as (cost) efficient as
national automated clearing houses (ACHs). Tailored to the requirements of
customers of national payment services, a PEACH must offer cost-efficient,
effective, swift and secure payment processing, i.e. it should support
straight-through processing (STP). STEP2 is the first and, to date, only
PEACH.
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Annual Report 2004