This page shows the Balance of Payments Glossary for entries D to F.
- D - Debt forgiveness
- Debt securities
- Derivatives
- Direct investment
- Disbursements
- Dividend
- E - Equity
- Equity securities
- Euro area
- Eurocurrency market
- Euro/European Currency Unit (ECU)
- European Central Bank (ECB)
- European Investment Bank (EIB)
- European Monetary System (EMS)
- Eurosystem
- Exchange control
- Exchange cover scheme (ECS)
- Exchange Equalisation Account (EEA)
- Export credit
- External debt
- F - Financial account
- Financial auxiliaries
- Financial corporations
- Financial derivatives
- Financial gold
- Financial leasing
- Financial surplus or deficit (FSD)
- FISIM
- f.o.b. (free on board)
- Foreign
- Forwards
- Futures
D - Debt forgiveness
The voluntary cancellation of all or part of a debt within a contractual arrangement between a creditor in one country and a debtor in another country.Debt securities
Debt securities cover bonds, debentures, notes etc., and money market instruments. These are split into long and short (up to one year) term, based on original maturity.Derivatives
See ‘Financial derivatives’.Direct investment
Net investment by UK/foreign companies in their foreign/UK branches, subsidiaries or associated companies. A direct investment in a company means that the investor has a significant influence on the operations of the company, defined as having an equity interest in an enterprise resident in another country of 10 per cent or more of the ordinary shares or voting stock. (See ‘Branch’, ‘Subsidiary’ and ‘Associated companies’.) Investment covers not only acquisition of fixed assets, stock building and stock appreciation, but also all other financial transactions, such as: additions to or payments of working capital; other loans and trade credit; and acquisitions of securities. Estimates of investment flows allow for depreciation in any undistributed profits. Funds raised by the subsidiary or associate company in the economy in which it operates are excluded as they are locally raised and not sourced from the parent company.Disbursements
Operating expenses.Dividend
A payment made to company shareholders from current or previously retained profits. Dividends are recorded when they become payable.E - Equity
Equity is ownership of a residual claim on the assets of the institutional unit that issued the instrument. Equities differ from other financial instruments in that they confer ownership of something more than a financial claim. Shareholders are owners of the company whereas bond holders are outside creditors.Equity securities
Equity securities are shares issued by companies to shareholders. Purchases of equity securities in which the purchaser does not have any significant degree of control over the company (that is, less than 10 per cent of the equity capital) fall within portfolio investment; otherwise it falls within direct investment. Equity securities include mutual fund shares.Euro area
The euro area encompasses those member states of the European Union in which the euro has been adopted as the single currency and in which a single monetary policy is conducted under the responsibility of the decision-making bodies of the European Central Bank. As from 1 January 2011 the euro area comprises Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, the Slovak Republic, Slovenia and Spain.Eurocurrency market
All borrowing and lending by banks in currencies other than that of the country in which the banks are situated.Euro/European Currency Unit (ECU)
The ECU was officially introduced in 1979 in connection with the start of the European Monetary System (EMS). In the EMS, the ECU served as the basis for determining exchange rate parities and as a reserve asset and means of settlement. It was a composite currency which contained specified amounts of the currencies of the member states of the European Union. The currencies making up the ECU were weighted according to their economic importance and use in short-term finance. As from September 1989 the weightings of the ECU were revised to include both the Spanish peseta and Portuguese escudo. The ECU was converted into the euro at the start of European Monetary Union on 1 January 1999, with Greece joining on 1 January 2001. From 1 January 2003, the euro became the currency of the member states of the European Monetary Union.European Central Bank (ECB)
The Monetary Authority for the euro currency, based in Frankfurt. The ECB, together with the national central banks of the member states, manages monetary policy and the banking system across the European Monetary Union area.European Investment Bank (EIB)
This was set up to assist economic development within the European Union. Its members are the member states of the EU.European Monetary System (EMS)
The EMS was established in March 1979. Its most important element was the mechanism known as the ERM (Exchange Rate Mechanism) whereby the exchange rates between the currencies of the participating member states were kept within set ranges. The UK joined the ERM on 8 October 1990. On 16 September 1992 the UK’s membership of the ERM and the EMS was suspended. The EMS was superseded by the single currency when 11 of the participating member states joined European Monetary Union on 1 January 1999. Since then Greece joined on 1 January 2001, Slovenia joined on 1 January 2007, Cyprus and Malta joined on 1 January 2008, Slovakia joined on 1 January 2009 and Estonia joined on 1 January 2011.
Eurosystem
The Eurosystem comprises the European Central Bank (ECB) and the national central banks of the member states which have adopted the euro in Stage Three of Economic and Monetary Union (EMU). In 2011 there are 17 national central banks in the Eurosystem. The Eurosystem is governed by the Governing Council and the Executive Board of the ECB and has assumed the task of conducting the single monetary policy for the euro area since 1 January 1999. Its primary objective is to maintain price stability.Exchange control
A legal control imposed by governments on the ability of persons, businesses and others to hold, receive and transfer foreign currency. The extent of the Exchange Control Act of 1947 was considerably reduced in June and July 1979 and the Act was repealed in 1987.
