Dollar Sign by Andy Warhol, 1981.
AAA rating (triple A): the highest possible rating assigned by credit rating agencies, notably to bonds. AAA-rated bonds are deemed to have an exceptional degree of creditworthiness, while the lowest ratings are C or D, depending on the rating agency.
Assets (actifs): resources with economic value owned by an individual, a company or a country with the expectation that it will provide a future benefit. Assets are reported on a company’s balance sheet.
–> sale of assets: vente d’actifs, cession d’actifs
–> troubled assets, distressed assets: actifs dépréciés, actifs douteux
Asset-backed security, ABS (titre adossé à des actifs, créance titrisée): a financial security collateralized by a pool of assets such as loans, leases, credit card debt, etc.
Bailout (renflouement, sauvetage): a situation in which a business, an individual or a government offers money to a failing business to prevent the consequences of its downfall.
Balance sheet (bilan): a balance sheet reports a company’s assets, liabilities and shareholders’ equity at a specific point in time. It is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders.
Bank run (ruée bancaire, panique bancaire, retrait massif de dépôts): this occurs when a large number of clients simultaneously attempt to withdraw cash from their deposit accounts because they fear the bank might become insolvent.If many banks suffer from simultaneous bank runs, it turns into a banking panic.
Bankruptcy (faillite): a legal term for when a person or business cannot repay their debts. Other terms for bankruptcy include “failure” or “bust” (“to go bust”).
–> to file for bankruptcy: déposer son bilan
–> near-bankruptcy: quasi-faillite
Basel Accords (accords de Bâle): the Basel Accords are three series of banking regulations (Basel I, II and III) set by the Basel Committee on Bank Supervision, providing recommendations on banking regulations regarding capital risk, market risk and operational risk. The purpose of the accords is to ensure financial institutions have enough capital to meet obligations and absorb unexpected losses.
Bear market (marché baissier): a situation in which share prices fall and widespread pessimism causes the stock market to spiral down.
Bid (offre): an offer made by an investor, trader or dealer to buy a security, commodity or currency. It stipulates both the price the buyer is willing to pay and the quantity they will purchase at that price.
Black Monday [US] (lundi noir): Monday, 19 October 1987, when the Dow Joneslost almost 22%: the event marked the beginning of a global stock market decline.
Black Wednesday [UK] (mercredi noir): on Wednesday, 16 September 1992, a collapse in the pound sterling forced Britain to withdraw from the European Exchange Rate Mechanism, the mechanism designed in the late 1970s to stabilize European currencies in preparation for the Economic and Monetary Union and the introduction of the euro.
Black Tuesday [US] (mercredi noir): Tuesday, 29 October 1929, when the Dow Jones fell by 12%: more than 16 million shares were traded in the panic sell-off, which effectively ended the Roaring Twenties and led the global economy into the Great Depression.
Board of Governors [US] (conseil des gouverneurs, conseil d’administration): the Federal Reserve’s Board of Governors is a federal agency of seven members, appointed by the president, confirmed by the Senate, and serving 14-year terms.
Bond (obligation): a debt security under which the issuer owes the holders a debt and must pay them interest (the ‘coupon’) or repay the principal at a later date (the ‘maturity date’: échéance). Bonds are often negotiable, i.e., their ownership can be transferred in a stock market (like the NYSE).
–> a bondholder: un détenteur obligataire
–> to issue bonds: émettre des obligations
Bonus (bonus): compensation given to an employee in addition to his/her normal wage, as a reward for achieving specific goals set by the company, for dedication to the company or even to join it.
Boom and bust (cycle expansion-récession): a process of economic expansion and contraction that occurs repeatedly. During the boom, the economy grows, jobs abound and the market brings high returns to investors. In the subsequent bust, the economy shrinks, people lose their jobs and investors lose money.
Broker, stockbroker (courtier): a professional, usually associated with a brokerage firm, who executes buy and sell orders on behalf of clients for stocks and other securities, usually for a fee or commission.
Bubble (bulle): an economic cycle characterized by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behaviour, followed by a contraction or even the “bursting” of the bubble, when no more investors are willing to buy at the elevated price.
Budget deficit (déficit budgétaire): a budget deficit occurs when a government’s expenses exceed revenue. Accrued government deficits form the national debt.
Budget surplus (excédent budgétaire): when a government’s revenue exceeds outlays or expenditures.
Bull market (marché haussier): a situation in which market prices are rising or are expected to rise. Bull markets are characterized by optimism and investor confidence.
Buyout (rachat): when someone, a company or any institution buys all the shares of another company.
–> leveraged buyout, LBO: rachat d’entreprise par endettement
Central bank (banque centrale): a monopolized institution given privileged control over the production and distribution of money and credit. In modern economies, the central bank is usually responsible for the formulation of monetary policy and the regulation of member banks.
Chancellor of the Exchequer [UK] (chancelier de l’échiquier): the chancellor of the exchequer is the head of Her Majesty’s Treasury: commonly considered the second most powerful minister after the Prime Minister, he or she is responsible for all economic, financial and fiscal matters in the British government, and has oversight of public spending across all departments. Until 1997, the chancellor also controlled monetary policy, but the Bank of England was then granted control of its interest rates.
Collateralized Debt Obligation, CDO (obligation adossée à un emprunt, obligation adossée à des créances): a financial product that uses assets pooled together (mortgages, bonds, loans…) as collateral. There is a difference between ‘bespoke’ CDOs, which dealers create for specific groups of investors according to their needs, and ‘synthetic’ CDOs, which invest in credit default swapsand other noncash assets.
Collateral (sûreté, garantie): a property or asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses. Since collateral offers some security to the lender should the borrower fail to pay back the loan, loans secured by collateral typically have lower interest rates than unsecured loans.
Conservatorship (tutelle): a legal concept whereby a person can manage an incapacitated person’s financial and personal affairs.
Consumer spending (dépense des consommateurs): another term for private household consumption. Economists in the tradition of John Maynard Keynes believe consumer spending is the most important short-run determinant of economic performance. Other economists, sometimes known as supply-siders, believe private savings and production is more important than consumption.
Crash (krach, effondrement): a sudden and significant decline in the value of a market.
Credit crunch (étranglement du crédit): an economic condition in which banks and investors become wary of lending funds to individuals and corporations, because they are scared of bankruptcies or defaults, which drives up the price.
Credit Default Swap, CDS (contrat d’échange sur risque de crédit, contrat d’échange sur défaut de paiement): a particular type of credit derivative by which the buyer of a CDS makes payments to the seller up until the maturity date of a contract; in return, the seller agrees that, in the event that the debt issuer defaults, the seller will pay the buyer the security’s premium as well as all interest payments that would have been paid between that time and the security’s maturity date.
Credit rating agency, CRA (agence de notation financière): also known as raters or ratings services, rating agencies are companies that assign credit ratings, i.e., rate debtors’ ability to pay back debt by making timely interest payments and the likelihood of default. The debt instruments rated by CRAs may include government bonds, corporate bonds and collateralized securities, such as MBSs and CDOs. Credit rating is a highly concentrated industry, with the ‘Big Three’ controlling approximately 95% of the ratings business. Moody’s (founded in 1909) and Standard & Poor’s (founded in 1860) together control 80% of the global market, while Fitch (founded in 1914) controls a further 15%.
Currency (devise, monnaie): a generally accepted form of money, including coins and paper notes, issued by a government via the country’s central bank, and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.
–> currency maket: marché monétaire, marché des changes, marché des devises
Debt (dette): an amount of money borrowed by one party from another. Debt is used by institutions, corporations and individuals as a method of making purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.
–> debt-to-assets ratio: ratio d’endettement passif-actif
–> debt-to-equity ratio: ratio dettes / fonds propres, ratio capitaux d’emprunt / capitaux propres
–> debt ceiling: plafonnement de la dette
–> high-yield debt: créances à fort rendement
–> to refinance one’s debt: refinancer sa dette
–> securitized debt: dette titrisée
–> household debt: endettement des ménages
–> government debt: endettement du gouvernement, dette publique
–> sovereign debt: titres d’emprunts d’Etat
Default (défaut de paiement, cessation de paiement): the failure to pay interest or principal on a loan or security when due.
–> to default on a house loan: ne plus pouvoir rembourser un credit immobilier
–> default notice: mise en demeure (de payer)
–> a defaulter: mauvais payeur, débiteur défaillant
Deleveraging (désendettement): when a company or individual attempts to decrease its financial leverage. The most direct way is to immediately pay off any existing debt on its balance sheet.
Delinquency (impayé, retard de remboursement): delinquency occurs when an individual or corporation with a contractual obligation to make payments against a loan in a timely manner does not make payments on time.
–> delinquent home owner: propriétaire en défaut
–> delinquent loan: prêt en souffrance
–> delinquent payment: remboursement en retard
Depression (dépression): a severe and prolonged downturn in economic activity, including substantial increases in unemployment, a drop in available credit, diminishing output, bankruptcies and sovereign debt defaults, reduced trade and commerce, and sustained volatility in currency values. In economics, a depression is commonly defined as an extreme recession that lasts two or more years.
Deregulation (dérégulation): the reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.
Derivative (dérivé): a financial security with a value that is derived from an underlying asset or group of assets (stocks, bonds, commodities, currencies, interest rates, market indexes, etc.). The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying assets. Derivatives can either be traded on an exchange (for instance on the NYSE) or over-the-counter (OTC) (en vente libre, hors cote), i.e., in a decentralized way. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated (and thus have greater risk), whereas derivatives traded on exchanges are standardized.
Devaluation (dérégulation): a deliberate downward adjustment of the value of a country’s currency relative to another currency, a group of currencies or a standard. Devaluation is different from depreciation (a situation in which the value of the currency diminishes without it being deliberate), and it is the opposite of revaluation, which consists in a calculated upward adjustment to a country’s official exchange rate.One reason a country may devalue its currency is to combat a trade imbalance. Devaluation reduces the cost of a country’s exports, rendering them more competitive in the global market. This, in turn, increases the cost of imports so that domestic consumers are less likely to purchase them, further strengthening domestic businesses.While devaluing a currency may be an attractive option, it can have negative consequences. Increasing the price of imports protects domestic industries, but they may become less efficient without the pressure of competition. Higher exports relative to imports can also increase aggregate demand, which can lead to higher inflation.
Dove (colombe): a dove is a person that tends to minimize the negative effects of inflation and promotes low interest rates to encourage economic growth, demand for consumer borrowing and spending, and ultimately employment.Doves are the opposite of hawks.
Dow Jones Industrial Average [US] (indice Dow Jones): an average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ. Often referred to as ‘the Dow,’ the DJIA is one of the oldest, single most-watched indices in the world and includes companies such as the General Electric Company, Walt Disney, Exxon Mobil Corporation and Microsoft Corporation. When the TV networks say ‘the market is up today,’ they are generally referring to the Dow. The DJIA was invented by Charles Dow in 1896.
Discount window [US] (guichet d’escompte): a central bank lending facility meant to help commercial banks manage short-term liquidity needs. The Federal Reserve and other central banks make such loans at ‘discount rates,’ usually on the very short term, often overnight, and against collateral. (The term refers to the now-obsolete practice of sending bank employees to actual, physical windows in Federal Reserve branch lobbies to ask for loans.)
Dividend (dividende): a payment made by a corporation to its shareholders, usually as a distribution of profits. Dividend is allocated as a fixed amount per share, with shareholders receiving it in proportion to their shareholding. Distribution may be in cash or the amount can be paid by the issue of further shares.
Dollar [US]: the US dollar has been the official currency of the United States since 1792. It is the Federal Reserve that has the monopoly on the issuance of dollars, though concretely it is the US Mint and the Bureau of Engraving and Printing that produce the coins and banknotes, before selling them to the Federal Reserve Banks at manufacturing cost.Since the suspension of its convertibility to gold in 1971, the dollar has been ‘fiat money’.Beyond the US, the dollar is the key reserve currency for international trade and all other currencies markets revolve around the dollar market. As of June 27, 2018, there were approximately $1.67 trillion in circulation around the world.
Earnings (bénéfices): the amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year. Earnings are the main determinant of a company’s share price, because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. Earnings reported that deviate from analysts’ expectations can have large impacts on stock price.
Equity (fonds propres, capitaux propres): equity can have somewhat different meanings, depending on the context and the asset type. In finance, you can think of equity as one’s degree of ownership in any asset after subtracting all debts associated with that asset. For example, a car or house with no outstanding debt is entirely the owner’s equity because he or she can readily sell the item for cash and pocket the resulting proceeds.
–> equity financing: participation au capital, prise de participation
–> to be in negative equity: avoir une maison d’une valeur inférieure à celle de l’emprunt
Exchange (bourse): a marketplace in which securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to give companies, governments and other groups a platform from which to sell financial instruments to the investing public.
Federal funds [US] (fonds fédéraux): federal funds, often referred to as fed funds, are excess reserves that commercial banks and other financial institutions deposit at regional Federal Reserver banks; these funds can be lent, then, to other market participants with insufficient cash on hand to meet their lending and reserve needs. The loans are unsecured and are made at a relatively low interest rate, called the federal funds rate.
Federal Reserve Bank [US] (banque fédérale de réserve): one of the 12 regional branches of the Federal Reserve, based in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco. Each of them is supervised by a nine-person board of directors and a president, and five of the twelve presidents are part of the Federal Reserve’s Federal Open Market Committee.
Fiat money (monnaie fiduciaire): a currency without intrinsic value but which has been established as money, often by government regulation, and whose value is derived from the relationship between supply and demand. It is the opposite of commodity money, which is created from a good, often a precious metal such as gold or silver. Almost all currencies today are fiat money.
Footsie, FTSE 100 [UK] (l’indice Footsie): Footsie is slang for the Financial Times Stock Exchange 100 Share Index, which tracks the 100 largest companies by market capitalization that trade on the London Stock Exchange (whether they are British or not). Launched in 1984, it has similar importance in London to the U.S. Dow Jones Industrial Average and is a major indicator of the performance of the broader market.
Foreclosure (saisie): the legal process by which a lender takes control of a property, evicts the homeowner and sells the home after a homeowner is unable to make full principal and interest payments on his or her mortgage.
–> foreclosure auction: vente aux enchères de biens saisis
–> foreclosure of the debtor’s property: saisie des biens du débiteur
–> to receive a foreclosure notice:recevoir un avis de saisie
Financial Stability Board (Conseil de stabilité financière): established after the G20 London Summit in April 2009, the FSB is an international body that monitors and makes recommendations about the global financial system.
Futures (opérations à terme, contrats à terme): futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price.
–> futures market: marché à terme
Gold standard (étalon or): a monetary regime under which the government’s currency is fixed and may be freely converted into gold.
Golden hello (prime de bienvenue): a singing bonus offered to executives as an inducement to join from a rival company.
Golden parachute (parachute doré): substantial benefits given to top executives if the company is taken over by another firm and the executives are terminated as a result of the merger or takeover. Benefits may include stock options, cash bonuses, and generous severance pay.
Government bond (obligation d’Etat): the most well-known example of a government security is the bonds issued by a government to finance public expenditure, a way for it to borrow money. Because most government bonds are backed by the credit of the government, default is unlikely and government bonds are often considered risk-free. They also have a typically low rate of return.
Granny bond [UK] (bon du Trésor indexé): a ‘granny bond’ is the nickname for a bond issued by the British government with pensioners (or people aged 60 or above) as the intended bond buyers, the most well-known example being the National Savings Pensioners Guaranteed Income Bond.
(Forward) guidance (directives avancées): forward guidance is verbal assurance from a country’s central bank to the public about its intended monetary policy. It attempts to influence the financial decisions of households, businesses and investors by letting them know what to expect from interest rates. The central bank’s clear messages to the public are one tool for preventing surprises that might disrupt the markets and cause significant fluctuations in asset prices.
Hawk (faucon): a person that favours relatively high interest rates in order to keep inflation in check. In other words, hawks are less concerned with economic growth than they are with recessionary pressure brought about by high inflation rates. They are the opposite of doves.
High-frequency trading, HFT (transactions à haute fréquence): in financial markets, a type of algorithmic trading characterized by high speeds and high turnover rates, making use of computers to move in and out of positions in mere microseconds. High-frequency trading is considered to have contributed to greater and greater volatility on financial markets since the early 2000s.
Hostile takeover bid (offer publique d’achat): when a company makes a bid to acquire another company, and the directors of the latter are against the suggested takeover, it is considered a hostile takeover bid. The opposite is a friendly takeover bid, which is a takeover bid where the suggested takeover has the support of the target company’s directors.
Hyperinflation (hyperinflation): a very high, and usually also accelerating, rate of inflation.
International Monetary Fund, IMF (fonds monétaire international): formed in 1945 at the Bretton Woods Conference, the IMF is an international organization headquartered in Washington, DC, and designed to secure monetary cooperation, financial stability, international trade and economic growth.
Inflation (inflation): the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation — and avoid deflation — in order to keep the economy running smoothly.
–> inflation objective: objectif d’inflation
–> inflation report: rapport sur l’inflation
Insolvency (insolvabilité): a sate of financial distress in which an individual or organization can no longer meet their financial obligations with their lender or lenders as debts become due.
Interest rate (taux d’intérêt): the proportion of an amount of money loaned which a lender (typically a bank) charges to borrow its money. Interest rates may vary according to various factors, including a government’s directives to its central bank to accomplish the government’s goals, the currency of the principal sum lent or borrowed, the term to maturity of the investment, the perceived default probability of the borrower and supply and demand in the market.
Investment bank (banque d’affaires): By contrast with ordinary commercial or depository banks, investment banks obtain funds from investors and make more complex, riskier investments, speculating either for their own account or on behalf of their investors.
Junk bond (obligation à haut risque, obligation pourrie, titre douteux, action sans valeur): a junk bond is a high-risk and high-yield bond. Normally, these bonds have a high interest rate to compensate for the risk. In the US, a bond rated BB or below is considered a junk bond.
Keynesian economics (Keynésianisme): economic theory inspired from the works of the British economist John Maynard Keynes (1883-1946), advocating activist intervention policies by governments and central banks to stabilize market economies, notably during recessions and depressions. During the Great Depression, thus Keynes recommended increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the crisis. Keynesian economics is considered a “demand-side” theory, i.e., focusing on the means to manage the economy and stimulate growth from the perspective of consumers.
Laissez-faire (le laisser-faire): an economic theory from the 18thcentury opposing any government intervention in economic affairs. The driving principle behind it is that the less the government is involved in the economy, the better off business will be – and by extension, society as a whole. John Maynard Keynes was a prominent critic of laissez-faire economics, and he argued that the question of market solution versus government intervention needed to be decided on a case-by-case basis.
Lender of last resort (prêteur de dernier recours, prêteur en dernier ressort): a lender of last resort can provide extraordinary liquidity to individual banks or to the wider banking system in situations where the need for liquidity cannot be met by other sources. Having a lender of last resort is intended to prevent financial panics, especially bank runs that spread due to a lack of liquidity. In most countries, being the lender of last resort is one of the responsibilities of the nation’s central bank.
Leverage (effet de levier, levier financier): sometimes referred to as ‘gearing’ in the United Kingdom, leverage is a technique which consists in using borrowed funds in the purchase of an asset, with the expectation that the after tax income from the asset and asset price appreciation will exceed the borrowing cost. The ter mis sometimes used as synonymous with ‘leverage ratio’, i.e., the ratio of the debts of a company, an institution or an individual against their equity and/or capital.
–> over-leveraged: surendetté
–> to releverage: s’endetter à nouveau
Leveraged buyout (rachat par emprunt): a takeover of a company where the investors that take over the company use the company’s assets as collateral when they borrow money to finance their bid.
Libertarianism [US] (libertarianisme): a political philosophy emphasizing liberty as its core principle and advocating a very limited role for governments and other authorities. Founded in 1971 in the United States, the Libertarian Party thus promotes laissez-faire capitalism and shrinking the size and scope of government, through such measures as lowering taxes, eliminating the welfare state and suppressing the Federal Reserve.
LIBOR, London Interbank Offered Rate [UK] (taux interbancaire pratiqué à Londres, LIBOR): one of the primary benchmarks for short-term interest rates around the world. Many financial institutions, mortgage lenders and credit card agencies around the world set their own rates relative to the LIBOR.
Liquidity (liquidité): the degree to which an asset or security can be quickly bought or sold in the market. Cash is commonly considered the most liquid asset, while real estate, fine art and collectibles are examples of ‘illiquid’ assets.
–> illiquid financial products: produits financiers non-liquides
–> liquidity crisis: crise de liquidités
Living will [US] (testament de vie, plan de réglement): also known as an advance directive, a living will is a legal document that specifies the type of medical care that an individual does or does not want in the event he or she is unable to communicate his or her wishes.Since 2010 and the passing of Dood-Frank, the term ‘living will’ has also been used for the ‘resolution plans’ big banks must now submit to the Fed and the FDIC, in which they describe their strategy for rapid and orderly resolution in the event of material financial distress or failure of the company.
Loan (emprunt, prêt): money, property or other material goods that is given to another party in exchange for future repayment of the loan value amount along with interest or other finance charges.
–> adjustable-rate mortgage loan: prêt hypothécaire à taux variable
–> to securitize loans: titriser des prêts
–> to take out a loan: contracter un emprunt
–> subprime mortgage loan: prêt immobilier à risque, prêt hypothécaire de 2e catégorie
–> prime mortgage loan: prêt hypothécaire sans risqué
–> loan terms: conditions de prêt
Lobby (lobby, groupe de pression): a group of like-minded people banded together to influence an authoritative body, or, as a verb, to exert that influence (i.e., ‘to lobby’). A lobby is typically formed to influence government officials to act in a way that is beneficial to the lobby’s best interests, either through favourable legislation or by blocking unfavourable measures.
London Stock Exchange, LSE [UK] (bourse de Londres): located in Paternoster Square in the City of London, the London Stock Exchange is the largest stock exchange in Europe in terms of market capitalization, and the third-largest stock exchange in the world after the NYSE and NASDAQ.
Main Street [US] (l’économie réelle): a colloquial term used to refer to individual investors, employees, ‘ordinary people’ and the overall economy. Main Street is typically contrasted with Wall Street, with the latter referring to the financial markets, major financial institutions and big corporations, as well as the high-level employees, managers and executives of those firms.
Merger (fusion): an agreement that unites two companies into one new company. Mergers and acquisitions are done to expand a company’s reach, expand into new segments, or gain market share.
Mint (institution en charge de la frappe d’une monnaie, frapper une monnaie): the body in charge of producing and distributing a country’s coin currency. Created in 1792, the U.S. Mint has its headquarters in Washington, D.C., while its storage facilities for gold are in Fort Knox, Kentucky. It produces tens of billion of coins every year. In the UK, the Royal Mint has existed since 886 and operated for centuries within the Tower of London; it is now located in Wales, and is owned by Her Majesty’s Treasury.
Monetarism (monétarisme): a set of views based on the belief that the supply of money in an economy is the primary driver of economic growth. Monetarism is closely associated with the American economist Milton Friedman (1912-2006), who criticized Keynesianism and argued that governments should keep the money supply fairly steady, expanding it slightly each year mainly to allow for the natural growth of the economy, but otherwise refrain from intervening.
Monetary Policy (politique monétaire): the actions of authorities, notably central banks, to determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary policy is maintained through actions such as modifying the interest rate (i.e., lowering or increasing the cost to borrow money), buying or selling government bonds, changing the amount of money banks are required to keep in their vaults (i.e., bank reserves) and unconventional monetary operations like quantitative easing. Broadly speaking, there are two types of monetary policy, expansionary and contractionary. Expansionary monetary policy (also known as ‘easy monetary policy’) increases the money supply in order to lower unemployment, boost private-sector borrowing and consumer spending, and stimulate economic growth. Conversely, contractionary monetary policy slows the rate of growth in the money supply or outright decreases the money supply in order to control inflation; while sometimes necessary, contractionary monetary policy can slow economic growth, increase unemployment and depress borrowing and spending by consumers and businesses.
Money market (marché monétaire): Money-market funds constitute an important link in the financial chain because they use their deposits to make many of the short-term loans that large corporations need. Although money-market funds carry no federal deposit insurance, they are widely regarded as being just as safe as bank deposits, and they earn rates of return superior to those offered by the safest of all investments, U.S. Treasury securities.
Mortgage (crédit hypothécaire): mortgages are used by individuals and businesses to make real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Mortgages are also known as ‘liens against property’ or ‘claims on property.’ If the borrower stops paying the mortgage, the bank can foreclose, evict the home’s tenants and sell the house, using the income from the sale to clear the mortgage debt.
–> mortgage lender: prêteur hypothécaire, établissement de credit immobilier
–> mortgage payments: remboursements d’un emprunt logement
–> to take out a mortgage: contracter un emprunt immobilier
Mortgage-backed security, MBS(créance hypothécaire titrisée): a security backed by one or more mortgage loans.
NASDAQ: an acronym of National Association of Securities Dealers Automated Quotations, the second-largest exchange in the world by market capitalization after the NYSE, and it is the oldest electronic stock market in the world.
New York Stock Exchange, NYSE [US] (la bourse de New York): founded in 1792, the New York Stock Exchange is the world’s biggest major stock exchange and arguably the most important institution on Wall Street: rises and falls in the stocks exchanged on the NYSE are measured by the Dow Jones industrial average (DJIA), which tracks the 30 largest American firms.
NINJA loan [US] (prêt NINJA): slang for a loan extended to a borrower with ‘no income, no job and no assets’. Whereas most lenders require the borrower to show a stable stream of income or sufficient collateral, a NINJA loan ignores the verification process.
Occupy Wall Street [US]: a progressive protest movement that began in September 2011 in New York City’s financial district, crystallizing critiques of financial irresponsibility, corporate greed, corruption and income inequality. Its slogan ‘We are the 99%’ became the rallying cry of anti-globalization and left wing movements across the world.
Old Lady of Threadneedle Street [UK] (la vieille dame de Threadneedle Street): a metonym for the Bank of England, headquartered in Threadneedle Street since 1734.
Principal (principal du prêt, capital): the original sum of money borrowed in a loan, or put into an investment, or the face value of a bond.
Pound sterling (livre sterling): the official currency of the UK, it is the world’s oldest currency still in use, going back to at least the 9th century. The Bank of England has the monopoly on the issuance of pounds in England, yet seven more are authorized to do so in Northern Ireland, Scotland and Wales, while the coins themselves are produced by the Royal Mint in Wales. Sterling is the third most-held reserve currency in global reserves after the dollar and the euro.
Program trading: the use of computer algorithms to buy and/or sell large volumes of securities simultaneously, following predetermined patterns. For example, a trading algorithm might buy a portfolio of 50 stocks over the first hour of the day.
Quantitative easing, QE (soulagement quantitatif, assouplissement quantitatif): an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates, and increase lending and liquidity. Quantitative easing is usually considered when short-term interest rates are already at or approaching zero.
Quote (quotation, prix): the last price at which a security or commodity is traded. The bid quote for stock is the price and quantity at which a potential buyer is willing to make a purchase, while the ask quote shows what a current participant is willing to sell the shares for.
Recession (récession): a significant decline in economic activity that goes on for at least several months – usually more than two quarters of negative economic growth. It is visible in industrial production, employment, real income and wholesale-retail trade.
Reserve requirement (réserves obligatoires): the amount of cash that banks are bound to have in their vaults or at their country’s central bank, in line with deposits made by their customers.
Return on investment, ROI (retour sur investissement): a performance measure, used to evaluate the efficiency of an investment. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
Risk management (gestion du risque): the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions.
Securities and Exchange Commission, SEC [US] (organisme fédéral américain de réglementation et de contrôle des marches financiers): created in 1934, the SEC is an independent agency that regulates the securities industry and the nation’s stock and options exchanges.
Security (titre, valeurs boursière): a financial instrument that holds some type of monetary value. It may represent an ownership position (i.e., equity) in a corporation (via stock), or a creditor relationship (i.e., debt) with a governmental body or a corporation (represented by owning that entity’s bond).
–> securitization: titrisation
Sell-off (céder massivement, vente massive): the rapid and sustained selling of securities at high volumes that causes a sharp drop in the value of the traded securities. Unexpected adverse news can spark a sell-off, as can a market rumour.
Shadow banking system (système bancaire parallèle): financial activities that take place among institutions other than banks and/or outside the scope of federal regulators. These include investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds and payday lenders, all of which are a significant and growing source of credit in the economy. Examples of unregulated activities by regulated institutions include credit default swaps.
Share (action, part sociale): a unit of capital, expressing the ownership relationship between a company and its shareholders. The denominated value of a share is its face value, and the total of the face value of issued shares represent the capital of a company. The income received from the ownership of shares is a dividend. The process of purchasing and selling shares often involves going through a stockbroker.
–> shareholder, stockholder: actionnaire
–> to issue shares: émettre des actions
–> a share buyback: un rachat d’actions
Stimulus (relance): attempts to use monetary or fiscal policy to stimulate the economy. Monetary stimulus consists inlowering interest rates, quantitative easing, or other ways of increasing the amount of money or credit. Fiscal stimulus consists inincreasing government consumption or lowering taxes.
–> stimulus package: plan de relance
Stock market (bourse, marché boursier, marché financier): the collection of markets and exchanges where the issuing and trading of equities or stocks of publicly held companies, bonds, and other classes of securities take place.
–> stock: ensemble du capital ou des actions d’une société
Tariffs (droits de douanes, taxes sur les importations): a tax imposed on imported goods and services.
Tobin Tax (taxe Tobin): the Tobin tax is named after the American economist James Tobin (1918-2002), who advocated a small tax on conversions of one currency into another, in order to penalize short-term speculations on currencies. However, the term ‘Tobin Tax’ is now used to refer to all taxes levied on financial transactions so as to deter or control risky speculation, notably in the case of high-frequency trading. Another similar term is the ‘Robin Hood tax,’ notably in the UK.
“Too big to fail” (trop gros pour faire faillite, trop important pour disparaître): a catchphrase to refer to a theory and policy according to which some firms, notably banks, are literally so big that their bankruptcy would be disastrous to the whole economic system and that they therefore must be supported by government when they face potential failure.
Trade (échanger, négocier): in financial markets, trading refers to the buying and selling of securities.
–> trader: négociant, opérateur (en bourse)
–> trading: transactions, activités de négociation de marché
Treasury (Trésor public): the name of the government ministry or department in charge of economic, financial and fiscal policy in the UK and the US. Another name for her Majesty’s Treasury in the UK is the Exchequer. The heads of the Treasury are called the Chancellor of the Exchequer and the Treasury Secretary in the UK and the US respectively.
Treasury bill, T-Bill [US] (bon du Trésor): a short-term debt obligation backed by the Treasury Department of the U.S. government with a maturity of less than one year, sold in denominations of $1,000 up to a maximum purchase of $5 million.
Treasury bond, T-bond [US] (un bon du Trésor à long terme): a marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semi-annually. Treasury bonds are known in the market as primarily risk-free; they are issued by the U.S. government with very little risk of default.
Trend (tendance, orientation du marché): the general direction of a market or of the price of a security.
Unemployment (chômage): unemployment occurs when a person who is actively searching for employment is unable to find work. The most frequent measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labour force.
Venture capital (capital risque): a form of financing for small, early-stage, emerging firms that investors deem capable of growing fast. The investor will normally require equity (ownership stake) in the firm in exchange for the investment.
The Volcker Rule: originally proposed by Paul Volcker, a former Chairman of the Fed whom President Obama had appointed as the chair of his economic recovery board, the Volcker Ruleconsists in restricting American banks, notably commercial banks, from using their customers’ deposits to make high-risk speculative investments that do not benefit them.
Volume (volume): the number of shares, bonds or contracts traded for a security or on a whole exchange for a given period, also known as market turnover.
Wall Street: a street in the heart of the Financial District of Lower Manhattan, commonly used as a metonym for the U.S.’s financial industry as a whole. The term can also be used also as a metaphor for the culture and interests of financial capitalism and big business as opposed to the interests of small business and the middle class (i.e., “Main Street”).
World Bank (Banque mondiale): created in 1945, the World Bank is an international financial institution that provides loans to countries of the world for capital projects and to reduce poverty.
Zombie bank (banque zombie): a zombie company is a company that continues to operate while being insolvent or near bankruptcy; their shares are known as ‘zombie stock’ or ‘living deads’. Zombie banks are usually the recipients of government backings or bailouts intended to prevent them from dying.
The CONDORCET 