Global Economy Glossary Q to Z: Plain-English Definitions

About this page

Finance is full of terms that sound simple until you have to use them. This page is a plain-English glossary for Global Economy, covering entries such as QE, QT, RCSA, Real effective exchange rate, Real interest rate, each with a short definition and a pointer to the part of the volume where it is explained.

Keep it open while you read, or use it to settle an argument about what a term really means. Every entry is written to stand on its own, with no jargon left undefined, and the part number beside it tells you where to read more. Use it as a quick reference whenever a term trips you up.

A sample of the entries (99 terms on the full page)

QE — Quantitative easing: the central bank buys bonds and pays by creating reserves, so reserves and deposits rise together; used when short-term rates are already near zero.

Real interest rate — An interest rate after allowing for inflation: the extra purchasing power a lender earns, roughly the nominal rate minus expected inflation.

RegTech — Technology, increasingly AI, applied to compliance tasks such as KYC, AML monitoring, surveillance and regulatory reporting.

Repurchase agreement — A loan secured by bonds: the borrower sells them today and agrees to buy them back tomorrow at a slightly higher price.

Reserve-backed stablecoin — A token that promises redemption at $1 and holds cash, deposits and short-term Treasury bills against it.

ROE — Return on equity: net profit divided by shareholders’ equity, showing how well a company turns owners’ capital into profit.

Scope 3 — Emissions in a company’s value chain, outside its direct emissions (Scope 1) and its purchased energy (Scope 2).

Sector rotation — Shifting investment between sectors as the economy moves through recovery, expansion, late cycle and recession.

Shadow banking — Credit and finance outside the regulated banking system, done by hedge funds, money market funds, finance companies and similar entities. The FSB’s narrow measure of its riskiest, bank-like activities was $76.3 trillion, against $256.8 trillion for the broad non-bank sector.

Single-price auction — The US Treasury’s auction method: bids are accepted from the lowest yield upward until the offering is sold, and every winning bidder receives the highest accepted yield.

Soft landing — Bringing inflation down without causing a recession, as the US did between 2022 and 2024.

Standing repo facility — A Fed facility created in July 2021 that lends cash overnight against Treasury and agency securities at a rate at the top of the target range, capping what eligible firms pay for overnight funding.

Stockholms Banco — Sweden’s first bank, which in 1661 issued Europe’s first banknotes as loans, over-issued them and failed; the Riksbank was founded from its ruins in 1668.

Subprime mortgage — A home loan to a borrower with a weak credit history who is likely to default if house prices or income fall; the raw material of the 2008 crisis.

SWIFT — Society for Worldwide Interbank Financial Telecommunication: a cooperative messaging network that carries banks’ payment instructions but does not move money itself; more than 11,500 institutions are connected, and in 2022 selected Russian banks were cut off from it.

T-account — A two-column record of what an entity owns (assets) and owes (liabilities), used to show how one transaction changes several balance sheets at once.

Textbook multiplier — The old textbook claim that a reserve requirement turns each deposit into a fixed multiple of new deposits (for example $1,000 ÷ 0.10 = $10,000). Central banks say it does not describe how money is created; kept as history.

TLM — Transaction lifecycle management: the platforms, such as SmartStream TLM, that automate matching and the exception workflow for reconciliation breaks.

Trade deficit — The excess of imports over exports; a trade surplus is the reverse. The balance of trade is only one part of the balance of payments.

TREPS — India’s tri-party repo market, cleared through the CCIL, where banks and funds lend against government securities.

Unicorn — A privately held startup valued at $1 billion or more; the term was coined in 2013.

Useful life — Management’s estimate of how many years an asset will be used, which sets the yearly depreciation charge; shortening it raises reported costs without changing cash.

Vendor financing — A supplier helping to fund its customers’ purchases of its own products, which ties its sales to credit conditions.

Wholesale funding — Short-term borrowing by banks and dealers from institutional lenders, for example through repo and commercial paper, rather than from retail deposits; it can run like a bank run.

Zombie companies — Insolvent firms kept alive by fresh bank loans so that lenders can avoid admitting losses, as in Japan in the 1990s.