The CBCS glossary offers definitions of specific terms commonly used on the CBCS website and in our documents. Disclaimer: CBCS has developed these definitions to help the general public understand financial and economic jargon. Definitions may differ from those provided in other contexts.
The definitions below are also provided in Dutch and Papiamentu. Click on the English description for the translations.
Annual Percentage Rate (APR)
The total amount of all costs (including interest) of the consumer credit, represented as a percentage of the principal loan amount.
Annual Percentage Yield (APY)
The effective annual rate of return on a savings deposit or investment taking into account the effect of compounding interest.
An annual report of both the financial situation and the developments of a company, as well as the motivation for applying a certain policy with regard to these financial developments.
A series of fixed loan payments consisting of a principal and interest component paid at regular intervals (usually a month) over a specified period. During the term of the annuity loan, the interest component decreases while the principal component increases by the same amount, leaving the total periodic payment unchanged.
All assets owned by a company. This can be, for example, the buildings and equipment (which are referred to as tangible fixed assets), but it can also be due bills that have to be paid by another party, or cash and money in a bank account (which are referred to as current assets).
The process of professionally managing assets such as shares, bonds, and property.
Automated teller machine (ATM)-card
A form of debit card used in a cash machine to access an account by using a code or personal identification number.
Bank charges are costs incurred by the bank and passed on to the customer. These bank charges relate to being overdrawn, having a current account or costs of payment transactions.
Balance of payments
A statistical overview of the economic transactions between residents of Curaçao and Sint Maarten and non-residents elsewhere over a specific period (e.g., a quarter or a year). Residents and non-residents refer to persons, companies, and organizations.
A statement of the assets and liabilities of a firm, institution, government or individual at a specified date.
A statement provided by a bank or credit union to their account holders to keep them informed of all transactions made during the statement period. These statements are sent or posted online on a regular basis.
Banking Stability Index
The Banking Stability Index (BSI) is a tool used by the CBCS to measure the stability of the local banking sector. The index provides insight into the build-up of vulnerabilities and risks facing banks. The BSI includes indicators of capital adequacy, asset quality, earnings & profitability, and liquidity.
A basis point is one-hundredth of a percentage point. This financial term was developed because it’s more convenient to use in conversation instead of percentages, for example 3 basis points instead of 0.03 percent. The term basis points is commonly used for changes in interest rates. For example, interest rates that have increased from 3% to 4% are said to have increased not by 1% but by 1 percentage point or 100 basis points.
Securities that are not registered in the name of a specific owner. The bearer is the owner. Bearer instruments are negotiable instruments
A standard or point of reference against which things may be compared or assessed.
In terms of payments, the beneficiary is the ultimate receiver of the funds sent. The beneficiary can be a person or a company.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typical corporate or governmental). When a company needs to raise money, it can issue bonds to borrow the needed money. The bondholder receives interest payments from the borrower (issuer). Bonds usually pay fixed interest rates.
Branches of foreign banks
Branches of foreign banks are credit institutions as universal banks in the form of a legally dependent office or branch from the head office which is subject to supervision of a foreign supervisory authority (i.e. supervisory authorities of the head office).
There is a budget deficit when government expenditures exceed government revenues (e.g., taxes and fees) in a given period, e.g., a fiscal year.
Business Identifier Code (BIC)
The Business Identifier Code (BIC) is a unique serial code used in the SWIFT network (The Society for Worldwide Interbank Financial Telecommunication) for international and domestic payments transactions to identify a specific financial institution. Each financial institution has a unique SWIFT BIC that consists of 8 or 11 characters. The SWIFT code of de Centrale Bank van Curacao en Sint Maarten is CBCSCWCU. Each character placement has a meaning: the first 4 digits represent the Institution code (CBCS), then the next two are the Country code (CW), while the next 2 digits indicate the Location code (CU). The last 3 digits of an 11 characters SWIFT BIC indicate the Branch code (which is optional).
Caribbean Financial Action Task Force (CFATF): is an organization of states and territories of the Caribbean basin which have agreed to implement common counter-measures against money laundering and terrorism financing.
The person or organization in whose name a debit or credit card is officially registered
Money in the form of coins and notes
Cashless money is not cash and consists of assets held by the public at banks that can be immediately exchanged for cash or used for cashless payments.
Non-cash payments, whereby funds are transferred from one bank account to another via a payment or transfer order.
Central Bank Digital Currency (CBDC)
This is digital money issued by a central bank to the general public.
The process of transmitting, reconciling and, in some cases, confirming payment orders or security transfer instructions prior to settlement.
Potential for consequences from climate variability and change where something of value is at stake and the outcome is uncertain. Often represented as the probability that a hazardous event or trend occurs multiplied by the expected impact. Risk results from the interaction of vulnerability, exposure, and hazard.
Collateral: Property required by a lender and offered by a borrower as a guarantee of payment on a loan. Also, a borrower's savings, investments, or the value of the asset purchased that can be seized if the borrower fails to repay a debt.
Compliance: An action or state of adhering to a set of legislation, regulations, rules, policy, specifications, or understood norms.
Interest added to interest previously earned on the principal balance.
Consolidated international banks
Consolidated international banks are international credit institutions which through their parent company, are subject to adequate consolidated supervision by a foreign supervisory authority (i.e. supervisory authority of the parent company).
Consumer credit is a form of credit that is provided to consumers for personal or household purposes. A credit card, a personal loan or a coupon credit are examples of consumer credit.
Is a secure method of payment for consumers to purchase products or services by bringing their debit, credit or smartcard close to the point-of-sale terminal. Because no signature or PIN verification is required, contactless purchases are usually limited to small value sales. By making a contactless payment, the transaction is faster to process.
A correspondent bank is a bank that provides services to another bank, usually in another country. It acts as an intermediary or agent, facilitating wire transfers, conducting business transactions, accepting deposits, and gathering documents on behalf of another bank.
Cost of Living
The cost of living is the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period.
Credit unions are credit institutions operating in the legal form of a cooperative union and which have as objective to render assistance to their participants in saving and to extend loans to them.
The extent to which a person or company is considered able to meet the repayment obligation of the credit, based on the current outstanding credits.
A decline in the exchange rate caused by the supply and demand for a currency.
Currency Exchange Rates
The value of one country's currency in relation to another currency or the rate at which one currency will be exchanged for another. The CBCS calculates and publishes the official daily exchange rates for Curaçao and Sint Maarten every working day on its website. The CBCS sets 7 currencies against the NAf, namely the US dollar, Japanese yen, British pound sterling, Swiss franc, Canadian dollar, the euro and the Aruban florin. These rates apply to transactions up to and including NAf 25,000.
Cyclical unemployment is unemployment related to fluctuations in the economic cycle. In times of economic downturn, fewer new employees are hired, contracts are not renewed, and employees are laid off.
A rule that sets targets for the level of debt that the government seeks to achieve as a percentage of Gross Domestic Product over the medium term and long term.
A certificate that a borrower gives to a lender, and which serves as proof that the loan will be repaid. For example: bonds, shares, life insurance policies, etc. If the loan is not repaid, the lender can sell the certificate.
Debt service-income ratio
The ratio between the monthly mortgage payments plus all other monthly debt payments and the gross monthly income.
Debt-to-GDP ratio measures the gross debt of the government as a percentage of GDP. It is a key indicator for the sustainability of government finance.
Depreciation of fixed capital goods (e.g. machinery, inventory and buildings) expressed in an amount of money. The investment is made in one time/year, but because the capital asset is often used for several years, the costs are spread over its expected useful life.
A deliberate downward adjustment of the exchange rate of a country's currency within a fixed exchange rate system, which results in a lower exchange rate of the national currency in relation to the foreign reference currency. An example: the value of the national currency (EM) is currently EM 2 = Dollar 1 while after devaluation the value is EM 3 = Dollar 1. If a soda costs EM 10, that would be equal to Dollar 5 before devaluation and Dollar 3.33 after devaluation. Devaluation makes local products cheaper for foreign customers, while imported products will be more expensive.
The disposable income is equal to income less tax and social securities, and plus social benefits.
The portion of profits that a company pays to shareholders. Dividends are usually paid annually.
The investigation and examination of a company, conducted in the process of preparing for a business transaction. Due diligence should be completed before entering into any financial transaction or business relationship.
Commercial and financial penalties taken by a country, a group of countries or international organizations against another country, its government officials or citizens.
FATF Grey List
The FATF grey list refers to the FATF's practice of publicly identifying countries with strategic Anti Money Laundering and Countering the Financing of Terrorism (AML/CFT) deficiencies.
Is the value stated on a coin, banknote or security, such as an equity or a bond.
Money that is not backed by any commodity such as gold or silver. Fiduciary money derives its value largely through the public's trust in the issuers. Cheques are an example of fiduciary money.
The financial deficit of the government is equal to the fiscal deficit plus redemptions.
It means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
Financial institutions are institutions that provide financial services to their clients. Financial institutions play in general a crucial role as intermediaries between the demand for and supply of funds in financial markets. Some examples of financial institutions are:
• Banks: these institutions extend loans and acquire funds through deposits that are usually short-term.
• Insurance companies: these companies cover their policyholders against financial risks including loss from death, accidents and theft. They receive funds through premiums for their policies and invest in, among other things, bonds and mortgages.
• Pension funds: these institutions provide retirement income to participants that are covered by a pension plan. Funds are acquired by premium contributions from employers and/or employees and are invested in mortgages, bonds and stocks.
Is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. A combination of awareness, knowledge, skill, attitude and behavior necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.
A condition in which the financial system is well-functioning and supportive of the economy, while resilient enough to absorb and recover from financial shocks.
The set of decisions a government makes with respect to taxation, spending, and borrowing.
Foreign exchange license
With this license residents of Curaçao and Sint Maarten can make capital transactions (for example an investment, taking out/providing a loan, participating in a company) with a foreign country through a local bank. A license is required if the amount of the transaction is NAf 150,000 or more.
A person or organization that controls whether people can have or use a particular service.
Local general banks are credit institutions operating as universal banks in the legal form of a limited liability company and which are subject to the supervision of a central bank.
Government budget balance
The government budget balance is the difference between government revenues and expenditures. When the government revenues are equal to the expenditures, the government has a balanced budget. There is a budget deficit when the expenditures exceed the revenues. Meanwhile, the budget has a surplus when the revenues are higher than the expenditures.
High yield bonds
High yield bonds are bonds issued by individual companies or governments, with a relatively low credit rating. As the name suggests, high yield bonds offer a proportionally high yield because of the increased risk involved. High yield bonds are also referred to as "junk" bonds.
The rate of change of some general index of prices. In many countries it is common to use an index based on a collection of prices of consumer goods—such as the consumer price index (CPI). The measure of CPI inflation is then the rate of change in the CPI.
Instant Payments are electronic payments that are processed within seconds and transferred from one bank to another. Both payer and payee receive immediate confirmation and the whole process is completed within 10 seconds. Instant Payments can be processed at any time, 24/7/365.
An institutional investor is an entity that pools and invests money on behalf of its members in stocks, bonds, real estate and other investment assets.
International Monetary Fund
The IMF works to achieve sustainable growth and prosperity for all of its 190 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being.
Investment is spending on tangible and intangible capital goods by private firms and the government with a useful life of more than one year (for example buildings, dwellings, machinery and transport vehicles, but also patents and copyrights).
The policy that determines how assets are invested, taking into account the established parameters with regard to risk and return, and in accordance with the regulatory framework.
The issuance of shares and bonds as a method of financing a company or government institution.
Labor market (tight/loose)
The labor market refers to the total demand and supply for labor.
Tight labor market: The labor market is tight when the demand for labor (employment) exceeds the supply (labor force).
Loose labor market: The labor market is loose when the supply of labor (labor force) exceeds the demand (employment).
The average value of the output that each employed person creates per unit of his or her time.
Lender of last resort
When a solvent financial institution experiences financial difficulties, a central bank can act as lender of last resort by providing that institution with liquidity in order to prevent that institution from not being able to meet its payment obligations. This way, the risk of spreading from one institution to another [risk of contagion], which can result in a crisis in the financial sector, is mitigated.
A monthly fee banks are required to pay to operate as a foreign exchange bank. This fee is currently set at 1% of the value of all transactions taking place from a resident to a non-resident account and on cash purchases of foreign currency. The amounts that are collected by the CBCS in Curaçao and Sint Maarten are transferred fully to the governments of the countries.
A bank licensed pursuant to NG 1994 no. 4 - National Ordinance on the Supervision of Banking and Credit Institutions 1994
This percentage represents the ratio between the amount of liquid assets (= funds withdrawable on the short term) and total deposits in the bank. A bank must ensure that there are always enough funds available in case customers want to withdraw their money. Not only the money in cash, but also the money that a bank has in its account at the Central Bank may be used as cover for the current accounts. This is referred to as coverage percentage.
The study of the behaviour of aggregate economic variables, such as total output (gross domestic product, GDP), total employment, the unemployment rate, inflation, and overall economic growth. Macroeconomics focuses on the behaviour of the aggregate economy.
Date on which the principal amount of a note, bond or other debt instrument and interest become due and payable.
Monetary policy refers to the decisions taken by a central bank to influence the price of money (i.e., the interest rate) and the quantity of money available in an economy.
Monetary policy statement
A statement issued after each monetary policy meeting of the Monetary Committee explaining its monetary policy decisions based on economic and monetary and financial analysis.
A monetary union is an agreement among member countries (in our case Curaçao and Sint Maarten) to share a common currency and a common monetary and foreign exchange policy conducted by a common central bank.
The Monetary Committee analyzes developments in and prospects for the economy, the foreign exchange reserve, the import coverage, the available liquidity of the banks, the foreign exchange transactions between the CBCS and the banks and the lending and decides on this basis whether the current monetary policy will be continued or modified.
The monetary system of a country or group of countries with cash and cashless money.
Money Transfer companies
Money Transfer Company is each person (natural and legal) executing a money transfer request of a third party on a professional or commercial basis, or involved in the realization of the money transfer on a professional or commercial basis.
NAf vs. ANG
The currency of Curacao and Sint Maarten is the Netherlands-Antillean guilder, often abbreviated to NAf or ANG. But what exactly is the difference between NAf of ANG? NAf is the currency symbol, a graphic symbol used to denote that a number is a monetary value, and which is determined by law. For example, we use the symbol $ for dollar, and the € for euro. ANG is the ISO-code, a standardized way of coding currencies in the international payments system. The ISO 4217 currency code is a three-letter alphabetic code for currencies. The first two characters are usually the ISO 3166-1-country code (i.e. ‘AN’) plus a third character denoting the currency unit (in our case, the G for guilder).
Nominal interest rate (NIR)
The stated annual rate of interest earned on a deposit account that does not reflect compounding of interest.
Non-consolidated international banks
Non consolidated international banks are international credit institutions for which a central bank acts as the primary supervisory authority.
A non-performing loan is a loan that is in default or close to being in default.
Open Market Operations
The issuing of, for example. certificates of deposit and the purchase or sale of government securities and bonds of government-owned corporations by a central bank. This influences the liquidity in the banking system and serves as an instrument for monetary policy.
The risk of negative financial, business and/or reputational impacts resulting from inadequate or failed internal governance and business processes, people, systems, or from external events.
Overextension of credit
Overextension describes when monthly repayments of all accumulated loans exceed 37% of the gross monthly income of the borrower.
PEP (Politically Exposed Person)
Politically exposed person (PEP): Person who is or has been entrusted with prominent public functions and the direct family members or close associates of such persons. PEPs are also persons who are or have been entrusted with a prominent function by an international organization as members of senior management, i.e. directors, deputy directors and members of the board or equivalent functions and the direct family members or close associates of such persons.
This is, for example, an invoice number or a debtor/customer number, which is included in a transaction in order to identify and process the payment.
An electronic payment with a debit card - a payment card that is secured with a PIN code.
The rate at which the commercial banks can borrow at the CBCS in case of a liquidity shortage.
Point of Sale (POS) transaction
A point-of-sale transaction is a payment for goods or services, usually made in a retail setting. POS-payments are typically completed using credit or debit cards but can also be done with cash.
Primary income refers to earnings arising from the provision of labor and capital. It is the sum of the income from labor (wages), income from business (dividend) and income from financial assets (interest, rent, profit and lease).
We speak of protectionism, when countries protect their own companies against products/competition from abroad.
Purchasing power: The amount of goods and services one can buy with one's disposable income.
Is a (fraudulent) investment scam that profits almost solely by recruiting other people to participate in the program. New recruits make up the base of the pyramid, and the payments coming in from new recruits (large base) are used to pay “fake” profits to participants higher up in the scheme (smaller top). The inability to find larger amounts of new participants will eventually cause the pyramid to collapse and many “investors” will lose their money. A pyramid scheme does not usually involve the selling of products, but rather relies on the constant inflow of money from new participants that works its way to the top of the pyramid.
Real interest rate
When we take our savings yield based on the nominal interest rate, and adjust this with the inflation rate, this leads to the real interest rate. If for example, your bank offers a 5% interest rate, but the consumer prices also increased by 5% that year, the real interest rate is 0%. This means that your savings yield including interest received, cannot buy you more in comparison with one year ago.
Excessive bureaucracy or adherence to official rules and formalities.
Overview of all (financial) institutions active in Curaçao and Sint Maarten and with a license or dispensation issued by the CBCS.
The amount of reserves a credit institution is required to hold with a central bank.
The capacity of social, economic and environmental systems to cope with a hazardous event or trend or disturbance, responding or reorganizing in ways that maintain their essential function, identity and structure, while also maintaining the capacity for adaptation, learning and transformation.
Is the gain profit (or loss) made on investments over a specific period.
The total value (total amount of income) of all sales of goods and services measured over a set amount of time.
Savings and credit funds
Savings and credit funds are credit institutions, mostly being foundations linked to enterprises, which as primary function provide savings opportunities to their participants, whether or not in order to provide them with a retirement income or an income at the termination of the employment relationship with the enterprise in question, and which extend loans to their participants.
Savings banks are credit institutions which attract their funds mainly in the form of savings.
A facility for the organized trading of securities.
The profit accruing to the monetary authority from its right to issue currency. This profit is generated because of the difference between the face value and the production costs of banknotes/coins.
Source of funds
Refers to the activity that generated the funds for a client to be deposited into an account. This may include e.g., earned income, interest, and dividend payment.
Specialized credit institutions
Specialized credit institutions are credit institutions which mainly extend one type of loans (e.g. mortgage banks, development banks and banks for consumer credit).
Refers to a (most often negative) ripple effect of an event in a country on its economy or economies of other nations.
Persistent high inflation combined with high unemployment and stagnation of economic growth (stalling or falling output).
Subsidiaries of foreign banks
Subsidiaries of foreign banks are credit institutions operating as universal banks in the legal form of a limited liability company and which are majority-owned banks of foreign credit institutions subject to supervision of a foreign supervisory authority (i.e. supervision by the supervisory authority of the parent company).
Financial aid (mostly temporary) from the government or a non-commercial private organization to an individual, a household, project, business or business sector, to facilitate specific activities or realize certain goals.
Systemic risk refers to the risk that triggers a breakdown of the financial system, resulting in significant losses for the economy and society.
Money that is deposited at a bank for a fixed period of time and at a specified interest rate. A time deposit receives a higher interest rate than a regular savings account because the money cannot be withdrawn within a specific term (unless you pay a penalty). Time deposits on the capital market are called “certificates of deposit”.
An order or message requesting the transfer of assets from the debtor to the creditor.
Government certificates of debt whose interest is discounted at the time of issue, which means that the holder of the treasury bill, when purchasing it, pays less than he will receive on the date it is due for payment. There are no coupons attached to the certificates and their maturity is one year or less. Treasury bills are bearer or registered.
Trust service providers
Trust Service Provider (TSP) is defined as a natural or a legal person who provides one or more trust services.
Unrealised gains or losses
Gains/losses arising from the revaluation of assets compared with their (adjusted) cost of acquisition.
Virtual Asset: A virtual asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes.
Volatility is the amount and frequency of price changes.
The wage costs are the total costs that an employer has for employing an employee. The wage costs consist of the employee's gross salary and the social security contributions that the employer must pay.
World Bank Group
The World Bank Group works with developing countries to reduce poverty and increase shared prosperity. The World Bank Group provides financing, policy advice, and technical assistance to governments, and also focuses on strengthening the private sector in developing countries.
A curve describing the relationship between the interest rate or yield and the maturity at a given point in time for debt securities with the same credit risk but different maturity dates.