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Glossary

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Macroeconomic adjustment programme

An extensive programme of policy reforms aimed at addressing problems in a programme country’s economic and fiscal situation. It is negotiated between the institutions and the country. The implementation of policy reforms set out in the macroeconomic adjustment programme is a precondition for receiving disbursements of ESM loans.

Macroeconomic Imbalances Procedure

A surveillance mechanism to detect and address economic trends that may adversely affect the proper functioning of a country, the euro area, or the EU. It aims to identify potential risks early on, prevent the emergence of harmful macroeconomic imbalances and correct the imbalances that are already in place.

Managing Director

The supreme executive officer and legal representative of the ESM, who is responsible for conducting its current business. The Managing Director is appointed by the Board of Governors for five years and may be reappointed once. The current Managing Director is Klaus Regling.

Margin (ESM loans)

A fee charged on loans and other types of financial assistance to reflect varying risk profiles of each instrument. 

Maximum lending capacity

The maximum amount of funds (€500 billion) that the ESM may lend to its Members, specified in the ESM Treaty

Memorandum of Understanding (MoU)

A document negotiated and signed on behalf of the ESM by the European Commission, in liaison with the ECB, the IMF (where applicable) and programme countries, detailing the policy conditions to be implemented in exchange for financial assistance. 

Money markets

A segment of financial markets where short-term financial instruments are traded. These include government bills, commercial paper (CPs), certificates of deposits (CDs), repurchase agreements (repos) and also derivatives (e.g. EONIA swaps) with maturities ranging from one day to one year.

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