Glossary

  1. A
  2. B
  3. C
  4. D
  5. E
  6. F
  7. G
  8. H
  9. I
  10. J
  11. K
  12. L
  13. M
  14. N
  15. O
  16. P
  17. Q
  18. R
  19. S
  20. T
  21. U
  22. V
  23. W
  24. X
  25. Y
  26. Z

C

CAP/CIP

The Capital Accumulation Plan (CAP) and the Capital Investment Plan (CIP) are two different investment schemes proposed by banks or other asset management intermediaries. In the first case the capital is invested at preset intervals. In the second, the capital is invested by paying one lump sum.

CAPITAL SHARE

Share capital or risk capital is capital paid into a company by its shareholders and represents the financial resources upon which the company can depend.

It is also called risk capital since, if the company ceases operation, its assets are liquidated first to pay off all its liabilities in order of priority and, at the end, what is left is paid out on the share capital, therefore making it the riskiest investment.

CAPITALIZED INTEREST

Occurs when the interest is not fully repaid with the instalment payments and is instead added to the total amount of the outstanding loan.

CARD CLONING

The process of copying, reproducing, or counterfeiting a payment card, in an identical form and with the same qualities and characteristics of the original, for illegal purposes. It is a deceitful scheme whereby the card holder doesn’t usually realize immediately that they have been scammed. For this reason, it is important to monitor payments regularly and activate text notification services (text alert) for each transaction, so that precautions can be taken immediately in the event of anomalous payments.

CASH

This terms refers to euro banknotes and coins. By using banknotes and coins to make a payment, buyers free themselves of any payment obligation towards sellers. Cash is said to have the power to extinguish a debt and this characteristic is conferred by law. This is why cash is referred to as 'legal tender' and no one can refuse to accept it as payment. There are two exceptions to this general principle:

  • in Italy, cash cannot be used to pay sums equal to or above €2,000, except in certain cases, such as money transfers and cash-for-gold;
  • coins have limited power to extinguish a debt: in the euro area no party is obliged to accept more coins than the amount that equals the exact value of payment.
CENTRAL CREDIT REGISTER (CR)

An information system managed by the Bank of Italy in which loans for more than €30,000 are registered based on obligatory reporting by lenders. If the borrower, owing to a serious breach of contract, is classified as 'in default', this fact is also recorded in the Central Credit Register for loans under €30,000. The data in the Central Credit Register are available to lenders, who can view the total amount of loans granted to each borrower by banks and financial companies, not limited to Italian lenders. Lenders can therefore learn whether the loans have been paid regularly and whether there have been any missed or late payments. Borrowers can also gain access, free of charge, to data concerning them in the Central Credit Register. To learn more contact a Bank of Italy branch. The data in the Central Credit Register are confidential.

CIRCULAR ECONOMY

The circular economy is a model for production and consumption, which involves reusing, repairing, refurbishing and recycling existing materials and products. In this way, the life cycle of products is extended, and waste is reduced to a minimum. When a product reaches the end of its life, its materials are kept within the economy, wherever possible, thanks to recycling. These can be productively used again and again, thereby creating further value.

The circular economy is a departure from the traditional, linear economic model, which is based on products designed to have a limited lifespan before turning into waste to be disposed of (and whose economic value is negative).

CLIMATE CHANGE
  • Climate change refers to the increase in global temperatures due to the release into and increased concentration of carbon dioxide and other greenhouse gases in the atmosphere as a consequence of human activities. The effects of climate change are assessed by constructing scenarios on how the climate could evolve in the future. The different climate scenarios are based on the combination of two series of factors: the possible evolution of some economic and social variables, such as population, per-capita GDP and its distribution, and urbanization and educational levels, on the one hand; the evolution of energy demand, greenhouse gas emissions and the concentration of gases in the atmosphere, on the other. The latter is associated with the intensity of climate change expected by the end of the century compared with the pre-industrial period.
CLIMATE NEUTRALITY

It means achieving a net-zero balance between the amount of greenhouse gas released into the atmosphere and the amount that the ecosystems can absorb. For instance, the European Union is committed to becoming a net-zero emission continent by 2050. This involves a 55 per cent reduction in greenhouse gas emissions by 2030 compared with 1990 levels.

CLOSED CIRCUIT

A payment system that transfers funds between customers of the same financial intermediary that manages the circuit.

COLLECTIVE CREDIT UNDERTAKINGS (ORGANISMI DI INVESTIMENTO COLLETTIVO DEL RISPARMIO - OICR)

Undertakings that collect money from savers and invest it in financial instruments, loans, movable and immovable assets and other assets. It is a category that includes intermediaries with different legal forms: they include investment funds set up and managed by asset management companies and variable-capital investment firms. Collective credit undertakings that meet certain conditions established by law can grant loans and, in such cases, are required to submit reports to the Central Credit Register.

COMMUNICATIONS (regular)

The customer must receive a clear communication on their contractual relationship at least once a year and in any case when the contract terminates. Communications must be made on a regular basis for open-ended agreements. The communication has to be on paper or in another durable medium, such as a file or an email and it has to include all the information on transactions and costs, even if it's in the form of a summary. For the opening of a current account credit facility, this information can be put into the periodic statement of accounts.

COMPARISONS

To be able to weight the various offers for home mortgage loans, it is important to read the information sheets (comparisons) or consult internet search engines that offer guidance and compare the different mortgages available, paying close attention to the Annual Percentage Rate (APR), which summarizes the total cost of the mortgage and must be published by law by all banks and financial intermediaries in the General Information Sheet.

COMPLAINT (TO THE ABF)

Complaints may be submitted to the Banking and Financial Ombudsman (ABF) if it concerns present or past banking and financial transactions and services, including payment services (see DISPUTE-written).

For example, if the complaint concerns a current account, mortgage, or personal loan, it may be filed with the ABF if the customer is requesting:

  • an amount equal to or less than € 100,000;
  • any amount, so long as the dispute relates to verifying the existence of rights, obligations and powers (for example, failure to provide transparency documentation, or failure to cancel a mortgage after the loan has been entirely repaid).

Complaints are filed via the ABF Web Portal. Complaints may be filed in hard copy only if the complaint is against:

  • two or more intermediaries at the same time;
  • a foreign intermediary operating in Italy under the rules on the freedom to provide services;
  • a loan guarantee consortium, pursuant to Article 112(1) of the Consolidated Law on Banking.
COMPLAINT (TO THE BANK OF ITALY)

By submitting a complaint to the Bank of Italy, the customer can report behaviours by the banks or financial intermediaries that he or she deems irregular or wrong. For the Bank of Italy, the complaints are a very important source of information allowing the Bank of Italy to perform its supervisory function. Pursuant to Law 241/1990, the submission of a complaint does not start an administrative proceeding. For more information, see Complaints concerning banking and financial services on the Bank of Italy's website.

CONSUMER

A natural person that acts for purposes that are not entrepreneurial, commercial, craft or professional in nature.

CONSUMER SAFEGUARDS

Consumer safeguards may be used by those who have had a problem with a bank or financial intermediary. Specifically, a consumer may:

  • submit a complaint directly to the intermediary;
  • seek redress from a system for alternative dispute resolution;
  • submit the dispute to the civil courts.

All intermediaries are required to establish a complaint office which must respond to consumer complaints within 60 days from the date in which the complaint is received. Usually, the information on the complaint office and on how to submit a complaint are available on the intermediary's website.

If the intermediary does not respond to the customer within 60 days, or if the customer is not happy with the reply, he or she can appeal to:

  • one of the systems for alternative dispute resolution;
  • the civil courts.

The Banking and Financial Ombudsman (Arbitro Bancario Finanziario - ABF) was created in 2009 as a system for alternative dispute resolution between customers and intermediaries. If the complaint falls within the jurisdiction of the ABF, it can be dealt with in a short time and at a low cost (€20). The information concerning the functioning of the ABF and how to file a complaint can be The customer can also submit a complaint to Banca d'Italia. Upon receipt of a complaint, the Bank of Italy usually sends a copy to the intermediary requesting the intermediary to timely and thoroughly respond to the customer; it investigates the issues reported and checks that the relations between customers and intermediaries are sound; and it may collect further information to carry out its supervisory function. In case Banca d'Italia is not competent to deal with a complaint, it forwards it to the competent authority, if not already engaged, and advises the customer accordingly. For more details, see the Bancad'Italia's website.

CONTRACT

An agreement between two or more parties to establish, regulate or terminate a legal relationship involving property.

CONTRIBUTION (economic)

Before filing a complaint with the ABF, a payment of €20 must be made to contribute to the costs of the procedure. The payment may be made by:

  • credit transfer to the current account in the name of 'Banca d'Italia - Segreteria tecnica dell'Arbitro Bancario Finanziario' - IBAN IT71M0100003205000000000904
  • deposit on the post office current account no. 98025661 in the name of 'Banca d'Italia - Segreteria tecnica dell'Arbitro Bancario Finanziario'
  • in cash at any of the Bank of Italy branches that are open to the public.
COP

The Conference of the Parties (COP) is the annual conference of the countries that have ratified the United Nations Framework Convention on Climate Change (UNFCCC) resulting from the 1992 Rio de Janeiro Agreements. The COP has met every year since 1992, with the exception of 2020, due to the pandemic; COP3, held in Kyoto in 1997, and COP21, held in Paris in 2015, are among the most significant COPs.

CORRECTIONS (to Central Credit Register data)

Financial intermediaries are responsible for the accuracy of the information they provide to the Central Credit Register (CR). They must correct any errors and submit the corrections to the Bank of Italy which then enters the corrections into its records and promptly communicates them electronically to all the intermediaries that received information pertaining to the entities whose data is being corrected.

Financial intermediaries that request 'preliminary information' concerning a potential customer receive data that is updated as at the time of the request. Persons requesting data that pertain to them receive both the corrections that were made over time and the updated data.

COUPON

A bond coupon is the interest that is periodically paid to the bondholder as a percentage of the face value of the bond.

CREDIT

A credit is the amount of money deposited in a current account.

CREDIT BROKER

Someone who proposes loan agreements on behalf of a lender and deals with preparing the contract from the time the proposal is presented. Credit brokers may be financial agents or credit intermediaries, and must be entered in the dedicated lists maintained by the Agents and Brokers Organization (Organismo degli Agenti e Mediatori - OAM) available at www.organismo-am.it. Financial agents work directly for the lender and can also finalize the contract. Credit intermediaries work autonomously and may only market the loan and prepare the contract but cannot finalize it; they charge consumers a fee for their services.

CREDIT CARD

A card that allows the cardholder to purchase (through a POS) goods and services from any commercial establishment that is a member of the payment circuit on which the card is accepted or to make cash withdrawals (using an ATM), with the sum being repaid at a later date. There is generally a spending limit on transactions that is indicated in the contract. Depending on the contract and the type of credit card, the cardholder can repay the entire amount at once – usually every month – by having it debited from a current account ('traditional credit card' or 'charge card'), or in instalments with interest added ('revolving credit card').

CREDIT HISTORY

The credit history of customers of banks and financial intermediaries is recorded in the Central Credit Register, which may contain positive information, as is the case for customers who make regular loan payments and who fully pay off their loans, or negative information, as regards customers experiencing a degree of difficulty (high or low) in repaying their loan.

CREDIT INSTITUTIONS

Credit institutions are banks and financial intermediaries offering leasing, factoring and consumer credit that are entered in dedicated registers. These are flanked by financial intermediaries, also entered in a register, that cannot accept deposits from the public but can only offer loans and manage loans sold in securitization transactions; some may be authorized to offer payment services, to issue and manage electronic money and to provide investment services.

CREDIT TRANSFER

A transaction in which a sum is transferred from one current account to another, even between accounts held at different banks. The person transferring the money is called the originator, while the recipient is called the beneficiary. When the transfer is made between accounts at the same bank, it is called a giro transfer.

CREDITOR INTEREST RATE

The rate used to periodically calculate the interest accrued on the amounts deposited (creditor interest), which is then credited to the account after taxes are withheld.

CREDITS

A sum of money paid into the current account by the account holder or a third party. The balance of the current account increases.

CREDITWORTHINESS DI CREDITO (o creditizio)

Creditworthiness is a measure of the consumer's ability to repay the amount borrowed on the deadlines set out in the loan agreement. The lender assesses the consumer's creditworthiness before granting the loan, based on adequate, proportionate and duly verified information about the consumer's financial situation. This information can be provided by the consumer or by consulting databases such as the Central Credit Register (CR) managed by the Bank of Italy or a Credit Reporting System (CRS) managed by private entities; in this case, the customer must be informed beforehand.

CROWDFUNDING

Crowdfunding is an innovative way of sourcing funding for new projects, businesses or ideas. People (typically individuals, firms or non-profit associations) who need funds for projects or personal reasons ask the general public for funding, usually on an online platform that makes it easy for those who need funds to meet those willing to fund projects. Crowdfunding is most often used by startup companies or growing businesses as a way of accessing alternative funds.

CROWDFUNDING PLATFORM

There can be different platforms for each type of crowdfunding: in Italy, there were about a hundred in 2019. Some of them have a specific purpose (cultural or art projects, real estate investment, etc.), others are devoted to supporting the economy of a specific area (e.g. South Tyrol); there are also multi-purpose platforms that can offer different products in different ways.

CRS Credit Reporting System (SIC)

CRSs are private data bases that gather data on people's access to credit and on how their loans are proceeding. Banks and financial companies can consult CRSs before granting loans, and provide them with the data they collect over the lifetime of the loans they grant.

CURRENT ACCOUNT

A bank current account is a product that collects savings and simplifies the management of money thanks to the services offered by banks for the execution of payments and the receipt of funds. The difference between the total amount of credits (deposits) and the total amount of debits (withdrawals) carried out up to a given date is the current account balance. Depending on the sign of the difference, the balance is either positive or negative. Every new entry on the account updates the balance.