Glossary
The terms our articles use, in plain words. Filter them by topic or by article.
A
- autocallable자동조기상환형 구조화상품
A structured note linked to a stock or index that repays early with a fixed return if the price is at or above a set level on check dates, and can lose the investor money if the price falls below a lower barrier. The banks that sell them hedge by trading the linked shares.
B
- balance of payments국제수지
A country's record of all money crossing its borders: trade and income in the current account, and investment flows such as purchases of shares and bonds in the financial account.
- balance-sheet effect대차대조표 효과
When a currency falls, debts owed in foreign currency grow in local-currency terms while income may not, weakening borrowers' finances and their ability to borrow and invest.
- base rate기준금리
The policy interest rate a central bank sets to steer borrowing costs across the economy. In Korea it is the Bank of Korea's Base Rate.
- basis point베이시스포인트(bp)
A hundredth of a percentage point, the usual unit for small gaps and changes in interest rates.
- bond yield국채 금리
The yearly return an investor gets by buying a government bond at today's market price and holding it until it is repaid. When bond prices fall, yields rise.
- breakeven inflation기대인플레이션(BEI)
The inflation rate at which an ordinary government bond and an inflation-protected bond of the same maturity would pay the same return, read as the market's expected inflation plus a risk premium.
- broad dollar index광의 달러지수
The US dollar's value against the currencies of many trading partners at once. A rise means the dollar has strengthened against the world as a whole.
- Bund분트
A bond issued by Germany's federal government. Investors treat the 10-year Bund as the euro area's safest benchmark.
- bystander제삼국
A country that is not a party to a tariff dispute but is affected by it, gaining when buyers switch to its goods or losing when its goods are inputs to the tariffed ones or when demand falls.
C
- call option콜옵션
A contract giving its buyer the right to buy an asset at a set price by a set date, so it pays off when the price rises. A put option is the opposite, a right to sell that pays off when the price falls.
- computable general equilibrium model연산가능 일반균형 모형
A numerical model of many countries and industries in which prices, trade and output adjust together until markets clear. It is used to compare what a policy such as a tariff would do against a world without it.
- consumer sentiment index소비자심리지수
A monthly Bank of Korea index, built from a household survey, of how people see the economy, their own finances and prices. Readings above its long-run average mean households are more optimistic than usual.
- currency hedging환헤지
Contracts that protect an investor holding foreign assets against losses if the foreign currency falls. Hedging does not mean selling the assets.
- current account경상수지
A country's earnings from selling goods and services abroad and from investments abroad, minus what it pays for the same. A surplus means more foreign currency comes in from these transactions than goes out.
D
- dollar invoicing달러 표시 결제
Setting the price of traded goods in US dollars, even when neither trading partner is the United States. Prices abroad then move little when the exporter's own currency changes.
- doom loop악순환 고리
The two-way link between banks and their own government: doubts about the government cut the value of the bonds banks hold, the banks weaken, and the cost of supporting them weakens the government in turn.
- dot plot점도표
A chart the Federal Reserve publishes four times a year in its Summary of Economic Projections, in which each policymaker's expected policy rate for coming years appears as a dot.
E
- effective tariff rate실효관세율
Customs duties actually collected divided by the value of goods imported, as a percentage. It is the tariff that was paid, which can be far below the rates announced because of exemptions, delays and shifts in where goods are bought.
- expected policy path기대 정책경로
Where investors expect a central bank to set its policy rate over the coming months and years. It shows up in market yields of one to three years.
F
- financial channel금융경로
The way a weaker currency against the dollar can hurt an economy through finance: borrowers with dollar debts look less creditworthy, so lenders lend less and financial conditions tighten.
- fire sale헐값 매각
Selling assets quickly, below what they are worth, because the seller is forced to, for example to repay debt or meet margin calls, rather than because the news about the assets has changed. Prices hit this way tend to recover once the selling stops.
- FOMC
The Federal Open Market Committee, the Federal Reserve body that sets the US policy interest rate and decides on bond purchases. It meets eight times a year.
- forward guidance포워드 가이던스
Statements by a central bank about where it expects to set its policy interest rate in future. It can be a date, a condition such as an unemployment rate, or a published forecast.
- friend-shoring우방국 중심 공급망 재편
Moving supply chains so that a country buys inputs from politically aligned countries rather than from rivals. Reshoring goes further and brings production home.
G
- geoeconomic fragmentation지경학적 분절화
The splitting of world trade and finance into blocs along political lines, with barriers rising between the blocs. The IMF uses the term for scenarios in which countries trade mainly with allies.
- global financial cycle글로벌 금융 사이클
The tendency of asset prices, credit and capital flows around the world to rise and fall together, often with US monetary policy and investors' appetite for risk.
- global value chain글로벌 가치사슬
The chain of steps across countries through which a product is designed, made from parts and sold, so that one country's exports contain value added in others.
- gross and net flows총유입과 순유입
The gross inflow is what foreigners buy of a country's assets; the net inflow subtracts what the country's own residents buy abroad. A country can draw a large gross inflow and still have a small net one.
H
- hall of mirrors거울의 방
A two-way loop in which markets set prices by reading the central bank's guidance while the central bank reads those same market prices as information, so both can miss what is new in the economy.
- herding군집행동
Investors copying one another's trades rather than acting on their own information. It can push prices further than news justifies, though measured herding can also reflect many investors reacting to the same news.
I
- index concentration쏠림(지수 집중도)
How much of a stock index's value sits in its few largest companies. The more concentrated an index, the more its moves follow those few stocks.
L
- leveraged ETF레버리지 ETF
An exchange-traded fund that aims to deliver a multiple, such as twice, of the daily move in a stock or index, using borrowed money or derivatives. To keep that multiple it has to buy after prices rise and sell after they fall.
M
- Magnificent 7매그니피센트 7
Seven of the largest US technology companies, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, whose shares make up a large part of US stock indices.
- margin call마진콜
A broker's demand for more cash or collateral when shares bought with borrowed money have fallen too far in value. If the investor cannot pay, the broker sells the shares, a forced sale.
- margin loan신용융자
Money a broker lends an investor to buy shares, with the shares as collateral. If their value falls too far, the broker can demand more collateral or sell the shares.
N
- net international investment position순국제투자포지션
What a country's residents own abroad minus what foreigners own in that country. A negative position means foreigners own more of the country than it owns of the rest of the world.
- net purchases순매수
What investors bought of an asset over a period minus what they sold. A negative figure means they sold more than they bought (net sales).
- news sentiment index뉴스심리지수
A daily Bank of Korea index of how upbeat or gloomy economic news articles are, worked out from their wording. Readings above its long-run average mean news is more upbeat than usual.
O
- order flow주문 흐름
The difference between orders to buy and orders to sell a currency or other asset over a period, whatever the reason for each trade. More buying than selling tends to push the price up.
- Outright Monetary Transactions (OMT)전면적 통화거래(OMT)
The ECB's 2012 offer to buy a euro country's short-term government bonds with no limit set in advance. It applies only to a country that accepts agreed policy conditions.
P
- policy-rate gap정책금리차
The difference between the interest rates two central banks have set. It says where policy stands today, not where markets expect it to go.
- portfolio investment증권투자
Buying stocks, fund shares and bonds across borders without taking control of the companies concerned, unlike direct investment.
- price-earnings ratio주가수익비율
A company's share price divided by its earnings per share, or a market's total value divided by its total profits. A high ratio means investors pay more for each unit of profit, often because they expect profits to grow.
- primary balance기초재정수지
A government's budget balance leaving aside the interest it pays on its debt. A primary deficit means the government spends more than it collects even before paying interest.
Q
- quantitative easing양적완화
Large-scale purchases of government bonds and other assets by a central bank, paid for with newly created reserves, to push down long-term interest rates when the policy rate is already near zero.
R
- reaction function반응함수
The rule, stated or implied, by which a central bank sets its policy rate in response to inflation, employment and other conditions. Markets try to infer it to predict future decisions.
- real effective exchange rate실질실효환율
A currency's value against a basket of trading partners' currencies, weighted by trade and adjusted for differences in inflation. A fall means the currency has become cheaper against partners as a whole.
- rebalancing리밸런싱(재조정)
Buying or selling to bring a fund's holdings back to its target, for example after prices move. For funds that promise a multiple of a daily return, rebalancing always goes in the same direction as the market's move.
S
- self-fulfilling crisis자기실현적 위기
A debt crisis brought on by fear itself: if lenders expect a default, they demand higher interest, and that higher interest can make a default more likely.
- short gamma숏감마
A position whose holder must buy as prices rise and sell as they fall to stay hedged, with trades that grow with the size of the move. Many short-gamma holders together can amplify price swings.
- small open economy소규모 개방경제
Economists' term for an economy that trades heavily but is too small to move world prices, interest rates or demand, so it must take them as given. In everyday use it means a trade-dependent economy.
- spread가산금리
The extra interest one borrower pays over a benchmark borrower on debt of the same maturity, usually measured in basis points.
T
- taper tantrum긴축 발작(테이퍼 탠트럼)
The sharp rise in bond yields in mid-2013 after the Federal Reserve signalled that it would slow, or taper, its bond purchases. The name has since been used for similar market reactions to a central bank's plan to buy less.
- terms of trade교역조건
The price of a country's exports relative to the price of its imports. When it rises, the same exports pay for more imports.
- TPITPI(전달보호수단)
The ECB's Transmission Protection Instrument, created in 2022: a backstop, meaning a central bank's promise to buy a country's bonds if its market turns disorderly. The ECB can use it when such moves threaten how its policy reaches a country, but not for tensions it judges to reflect that country's fundamentals.
- trade channel무역경로
The way a weaker currency can help an economy through trade: exporters earn more in local currency or can cut their prices abroad, and imports become dearer.
- trade diversion무역 전환
The shift of purchases from one supplier country to another because a tariff or other barrier has made the first more expensive. The buyer's total imports may not change; who supplies them does.
- trade openness무역 개방도
Exports plus imports of goods and services as a share of a country's income or output. A higher ratio means the economy depends more on trade.
- trade-policy uncertainty무역정책 불확실성
Doubt about what tariffs and trade rules will be, which can hold back investment and trade even before any tariff takes effect. It is often measured by how often newspapers write about it.
U
- uncovered interest parity유위험 이자율 평가
The textbook idea that investors expect a higher-interest currency to lose value by just enough to offset its extra interest. It implies that a currency reflects the whole path of interest-rate gaps investors expect.
V
- valuation effect평가 효과
The change in the value of assets investors already hold that comes from prices or exchange rates moving, not from buying or selling.
- VIX
An index, worked out from option prices, of how much the US stock market is expected to swing over the coming month. It is widely used as a gauge of investors' fear.
- volatility변동성
How far a price moves from one day or month to the next, up or down, measured over a past period. It is often annualised, scaled up to show how much the price would swing over a year at that pace.