Currency, Money and Debt Definitions

Term	Definition
BoE	Bank of England
OECD	Organisation for Economic Co-operation and Development
ECB	European Central Bank
External Debt	Total amount owed to foreign investors by the government and the private sector. Must be financed out of foreign exchange earnings
Floating Rate Note (FRN)/Floater	A debt instrument with a variable interest rate.
Government Borrowing/Deficit	Represents the difference between total spending and receipts over a period of time.
Government Debt	Represents the amount the public sector owes to UK private sector organisations and overseas institutions, largely a result of government financial liabilities on the bonds (gilts) and Treasury bills it has issued. Represents the total amount of money owed at a point in time.
Government Deficit/Net Borrowing	Measures the gap between revenue raised (current receipts) and total spending (current expenditure plus net investment). A positive value indicates borrowing. A negative value indicates a surplus.
Intermediate Other Financial Corporations (IOFCs)	IOFCs include central clearing counterparties, mortgage and housing credit corporations, bank holding companies, SPVs, etc.
Inter-MFI Difference (BoE)	The inter-MFI difference is the difference between MFIs’ liabilities  attributed  to  other  MFIs  and  MFIs’  assets  attributed to other MFIs. In theory, these items should be equal  but  in  practice  small reporting  errors  cause  a  difference. The most common cause of these errors is the misclassification  of  counterparties  to  the  wrong  sector,  which may cause deposits and loans from certain sectors to    be    over-represented    and    others    to    be    under-represented. In the compilation of the MFIs’ consolidated balance  sheet  (where  inter-MFI  liabilities  and  assets  are  consolidated out), the inter-MFI difference is allocated to various  sectors  in  an  attempt  to  correct  this  inaccuracy.  The   current   allocations   of   the   sterling   and   foreign   currency inter-MFI differences  are  based  on  a  study  by  the British Bankers’ Association in 1992 and are applied to the broad money and lending data from 1986 onwards. Only the sterling inter-MFI difference affects M4 and M4 lending.
M1 (Narrow Money) OECD)	The target definition for narrow money covers currency, i.e. banknotes and coins, as well as balances which can immediately be converted into currency or used for cashless payments, i.e. overnight deposits. Data should be measured on an end-of-period basis.
M2 (Intermediate Money) (OECD)	The target definition for Intermediate money comprises narrow money (M1) and, deposits with a maturity of up to two years and deposits redeemable at a period of notice of up to three months. Depending on their degree of moneyness, such deposits can be converted into components of narrow money, but in some cases there may be restrictions involved, such as the need for advance notification, delays, penalties or fees. The definition of M2 reflects the particular interest in analysing and monitoring a monetary aggregate that, in addition to currency, consists of deposits which are liquid.
M3 (Broad Money) (OECD)	Broad money (M3) includes currency, deposits with an agreed maturity of up to two years, deposits redeemable at notice of up to three months and repurchase agreements, money market fund shares/units and debt securities up to two years.
M4 (BoE)	The UK private sector other than Monetary Financial Institutions (MFIs)) holdings of: ·      sterling notes and coin; ·      sterling deposits, including certificates of deposit; ·      commercial paper, bonds, FRNs and other instruments of up to and including five years' original maturity issued by UK MFIs; ·      claims on UK MFIs arising from repos (from December 1995); ·      estimated holdings of sterling bank bills; and ·      35% of the sterling inter-MFI difference (added to OFC deposits, within wholesale M4).
Monetary Financial Institutions (MFI)	National central banks, ECB, credit institutions defined in Article 4(1)(1) of Regulation (EU) No 575/2013, financial institutions that get deposits or close substitutes for deposits from the public and which grant credit or make investments in securities.
Money	A medium of exchange containing a large amount of value within small space, that is durable, portable, divisible (can be easily divided to enable a person to buy products of different value), fungible/uniform (same wherever it is on earth), unit of account (same purchasing power worldwide), that is in limited supply (money is only valuable if it is in limited supply).
Other Financial Corporations (IOFCs)	Private financial corporations other than monetary and financial institutions that are engaged primarily in the provision of financial services, such as financial intermediation, insurance companies and pension funds and activities auxiliary to financial intermediation (such as fund management).
National Debt	Total debt owed by the government.
Public/National/Sovereign//Country Debt or Government Debt	Debt owed by the government to the public and to other governments.
Repurchase Agreement (Repo)	Where a dealer sells government securities to investors, on short term basis (usually overnight), and then buys them back the next day.
Quantitative Easing	When a central bank creates money and uses that newly created money to purchase government securities or other securities from the market. This amounts to monetary debasement, causes inflation and transfers wealth from the many to the few who get the newly created money. However, central banks like to claim that by increasing the money supply (effectively giving newly created money to private banks) they are encouraging private banks to make more loans which the central banks claim helps investment.

Term	Definition
External Debt	Total amount owed to foreign investors by the government and the private sector. Must be financed out of foreign exchange earnings
Floating Rate Note (FRN)/Floater	A debt instrument with a variable interest rate.
Government Borrowing/Deficit	Represents the difference between total spending and receipts over a period of time.
Government Debt	Represents the amount the public sector owes to UK private sector organisations and overseas institutions, largely a result of government financial liabilities on the bonds (gilts) and Treasury bills it has issued. Represents the total amount of money owed at a point in time.
Government Deficit/Net Borrowing	Measures the gap between revenue raised (current receipts) and total spending (current expenditure plus net investment). A positive value indicates borrowing. A negative value indicates a surplus.
Intermediate Other Financial Corporations (IOFCs)	IOFCs include central clearing counterparties, mortgage and housing credit corporations, bank holding companies, SPVs, etc.
Monetary Financial Institutions (MFI)	National central banks, ECB, credit institutions defined in Article 4(1)(1) of Regulation (EU) No 575/2013, financial institutions that get deposits or close substitutes for deposits from the public and which grant credit or make investments in securities.
Money	A medium of exchange containing a large amount of value in small area, that is durable, portable, divisible (can be easily divided to enable a person to buy products of different value), fungible/uniform (same wherever it is on earth), unit of account (same purchasing power worldwide), that is in limited supply (money is only valuable if it is in limited supply).
Other Financial Corporations (IOFCs)	Private financial corporations other than monetary and financial institutions that are engaged primarily in the provision of financial services, such as financial intermediation, insurance companies and pension funds and activities auxiliary to financial intermediation (such as fund management).
National Debt	Total debt owed by the government.
Public/National/Sovereign//Country Debt or Government Debt	Debt owed by the government to the public and to other governments.
Repurchase Agreement (Repo)	Where a dealer sells government securities to investors, on short term basis (usually overnight), and then buys them back the next day.
Quantitative Easing	When a central bank creates money and uses that newly created money to purchase government securities or other securities from the market. This amounts to monetary debasement, causes inflation and transfers wealth from the many to the few who get the newly created money. However, central banks like to claim that by increasing the money supply (effectively giving newly created money to private banks) they are encouraging private banks to make more loans which the central banks claim helps investment.