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Financial Glossary
Understanding Financial, Credit, & Real Estate Terms


 A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | XYZ  

Balance   —  The amount owed on a loan or credit card or the amount in a savings or investment account.

Balance of payments   —  An accounting statement of the money value of international transactions between one nation and the rest of the world over a specific time period. The statement shows the sum of transactions of individuals, businesses and government agencies located in one nation, against those of all other nations.

Balance of trade  —  That part of a nation's balance of payments dealing with imports and exports, which is trade in goods and services, over a given period. If exports of goods exceed imports, the trade balance is said to be favorable; if imports exceed exports, the trade balance if said to be unfavorable.

Balance sheet   —  A financial statement showing a "snapshot" of the assets, liabilities and net worth of an individual or organization on a given date.

Balloon payment   —  A large extra payment that may be charged at the end of a loan or lease.

Bank for International Settlements (BIS)  —  International organization established in 1930 and based in Basle, Switzerland, that serves as a forum for central banks collecting information, developing analyses and cooperating on a wide range of policy-related matters.

Bank Holding Company (BHC)   —  Company that owns, or has controlling interest in, one or more banks. A company that owns more than one bank is known as a multibank holding company. The Board of Governors is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency (the Comptroller of the Currency or the Federal Deposit Insurance Corporation).

Bank note   —  A term used synonymously with paper money or currency issued by a bank. Notes are, in effect, a promise to pay the bearer on demand the amount stated on the face of the note. Today, only the Federal Reserve Banks are authorized to issue bank notes, i.e., Federal Reserve notes, in the United States.

Bank regulation   —  The formulation and issuance by authorized agencies of specific rules or regulations, under governing law, for the conduct and structure of banking.

Bank run (bank panic)  —  A series of unexpected cash withdrawals caused by a sudden decline in depositor confidence or fear that the bank will be closed by the chartering agency, i.e. many depositors withdraw cash almost simultaneously. Since the cash reserve a bank keeps on hand is only a small fraction of its deposits, a large number of withdrawals in a short period of time can deplete available cash and force the bank to close and possibly go out of business.

Bank supervision   —  Oversight of individual banks to ensure that they are operated prudently and in accordance with applicable statutes and regulations.

Banker's acceptances  —  Banker's acceptances are negotiable time drafts, or bills of exchange, that have been accepted by a bank which, by accepting, assumes the obligation to pay the holder of the draft the face amount of the instrument on the maturity date specified. They are used primarily to finance the export, import, shipment or storage of goods.

Bankruptcy   —  A legal proceeding declaring that an individual is unable to pay debts. Chapters 7 and 13 of the federal bankruptcy code govern personal bankruptcy.

Barter  —  The direct exchange of goods and services among people. No money is used in the exchange.

Beige Book  —  Eight times a year, prior to FOMC meetings, each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key businesses, economists, market experts and other sources. The Beige Book summarizes this information by District and sector.

Board of Governors   —  Central, governmental agency of the Federal Reserve System, located in Washington, D.C., and composed of seven members who are appointed by the President and confirmed by the Senate. The Board of Governors is responsible for domestic and international economic analysis; with other components of the System, for the conduct of monetary policy; for supervision and regulation of certain banking organizations; for operation of much of the nation's payments system; and for administration of most of the nation's laws that protect consumers in credit transactions.

Book-entry securities   —  Securities that are recorded in electronic records, called book entries, rather than as paper certificates. Ownership of U.S. government book-entry securities is transferred over Fedwire.

Bretton Woods Conference  —  The name commonly given to the United Nations Monetary and Financial Conference, held (July 1-22, 1944) at Bretton Woods, N.H. The conference resulted in the creation of the International Monetary Fund, to promote international monetary cooperation, and of the International Bank for Reconstruction and Development. By December 1945, the required number of governments had ratified the treaties creating the two organizations, and by the summer of 1946 they had begun operation.

Broker-dealer  —  Any person, other than a bank, engaged in the business of buying or selling securities on its own behalf or for others.

Brokers' loans   —  Money borrowed by brokers from banks for uses such as financing specialists' inventories of stock, financing the underwriting of new issues of corporate and municipal securities, and financing customer margin accounts.

Budget  —  An itemized summary of probable income and expenses for a given period.

Bureau of Labor Statistics (BLS)  —  A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices and many other variables.

Buydown   —  A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness.