Glossary

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M

MARCIANO PACT

This is a clause that can be agreed at the time of signing the mortgage contract. In this clause, the bank and the borrower establish that in the event the borrower fails to pay an amount equivalent to 18 payments, the bank acquires ownership of the mortgaged property, or the proceeds from the sale of such property, without having to seek recourse to the court system. The bank will also return to the borrower any amount that exceeds the value of the property (estimated by an independent expert) or the proceeds of the sale less the outstanding debt. The lender cannot make acceptance of this clause a condition for concluding the contract and must notify the borrower of the advantages and disadvantages of inserting the clause in the contract.

MARKETS

Banks manage liquidity by trading funds on the money markets and adjust their portfolios by buying and selling financial instruments on securities markets. These markets are important for the proper transmission of monetary policy. Turbulence on these markets or a malfunction of technological infrastructures can spread quickly, with potentially devastating effects on the stability of individual banks or of the whole financial system.

MCFADDEN

Daniel L. McFadden won the Nobel Prize in Economics in 2000 for his development of theory and methods for analysing discrete choice.

MIFID QUESTIONNAIRE

A series of questions that intermediaries are required to periodically ask clients as part of know-your-customer processes, in order to offer them products and services that are most suitable for their financial situation, investment goals, risk tolerance, financial needs, level of financial education and investment experience. The questionnaire is also useful for the investor to gain greater awareness and avoid investments that are not in line with their profile.

MODIGLIANI

Franco Modigliani won the Nobel Prize in Economics in 1985 for his pioneering analyses of saving and of financial markets.

MONETARY (policy)

Monetary policy concerns the decisions taken by central banks to influence the cost and availability of money in an economy.

In the euro area, the European Central Bank's most important decision in this respect normally relates to the key interest rates. Any change it makes to these rates affects in turn the interest rates commercial banks charge their customers for borrowing money. In other words, the decision influences consumer spending and business investment. In the case of the ECB, the objective of monetary policy is to keep prices stable, i.e. to keep inflation below, but close to, 2% over the medium term. This in turn helps it support general EU economic policies aiming at full employment and economic growth.

In times of prolonged low inflation and low interest rates, central banks may also adopt non-standard monetary policy measures, such as asset purchase programmes

The Bank of Italy contributes to draft monetary policy for the euro area through the Governor's participation in the Governing Council of the ECB. The Governor exercises his duties in full autonomy and independence, contributing to monetary policy decisions also based on the preparatory activities of the committees and working groups set up within the Eurosystem, which include representatives from the Bank of Italy. In accordance with the principles of decentralization and subsidiarity established at European level, the Bank of Italy also contributes to implementing monetary policy.

MONEY

The euro-area monetary aggregates are:

  • M1: is the sum of currency in circulation and overnight deposits
  • M2: is the sum of M1, deposits with an agreed maturity of up to two years and deposits redeemable at notice of up to three months
  • M3: is the sum of M2, repurchase agreements, money market fund shares/units and debt securities with a maturity of up to two years. As of June 2010, repurchase agreement transaction with central counterparties are excluded.

The national contributions to the M1, M2 and M3 monetary aggregates are calculated by excluding currency in circulation since, with the introduction of the euro, the quantity of banknotes and coins effectively held by each country is no longer directly measurable.

MORTGAGE

It is the most common form of real estate loan offered to consumers. A mortgage is a medium- to long-term loan, usually with a duration of 5 to 30 years. The borrower generally receives the entire amount in a lump sum and repays it over time in fixed or variable instalments. A mortgage is used to buy, build or renovate a building, particularly residential property. It can also be taken out to replace or refinance an existing mortgage for the same purpose. A mortgage is secured by a lien on a property.