Manda Soldi a Casa

Glossary

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Anti-Money Laundering
Italy, in order to protect the rights of its own citizens and avoid the use of proceeds from unlawful activity, has provided for a specific law with checks and regulations on money transfers designated as the anti-money laundering law. [see “Anti-money laundering law” card]


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Bank Transfer
This is an operation where I direct my own bank to transfer funds from my transaction account to that of another person.

Banking/Financial Arbitration Board
Body subject to the Bank of Italy which deals with the resolution of disputes between customers and financial intermediaries according to predetermined procedures when it has not been possible to resolve the problem directly between the two parties [see “What to do if something goes wrong?” card].

Basis Point
A basis point is a unit of measure used in finance to indicate the decimal values of a currency or of an interest rate. A basis point corresponds to 0.01%. Therefore, when reading that a certain rate is equal to 2% + 20bp, this expression corresponds to a rate equal to 2% + 0.20% = 2.20%.


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Capital Share
The portion of each instalment of a mortgage (or loan repayment) that is used to repay the loan itself. The actual instalment consists of the capital share plus the interest share.

Channels
A channel is the means chosen for sending money. A distinction is made between a formal channel (remittance is sent through a subject authorized to make money transfers) and an informal channel (remittance is sent through friends or relatives, or using mechanisms that do not foresee the use of tools or financial professionals regulated by law). [see “Ways of sending money” card]

Complaint
A complaint charges a financial intermediary with improper actions or of not respecting a right of the client or a regulation (regarding transparency, for example). In order for the complaint to be valid, it must be in writing and it must clearly indicate the name of the person making the complaint. The intermediary must answer the complaint within 30 days of when it is received.

Costs
The total cost of the remittance is given by the sum of several elements, some of which are knowable at the time of sending (explicit costs) and others which are not directly ascertainable (implicit costs). [see “The cost of the remittance” card]

Credit
Credit (also called a loan) is money that a person (or a bank or financial institution) lends to another person. The person who received the credit (the borrower) promises to pay it back according to certain pre-established conditions: by a certain date, in fixed instalments or in a lump sum. The borrower also pays interest on the loan.

Credit transfer
Transfer of money between two current accounts belonging to the same bank.


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EAR
Effective Annual Rate. This expresses the total cost of a loan: the sum of all commission and expenses incurred to obtain the loan plus the rate of interest paid.

Euribor
The interest rate at which banks make short-term loans to each other (even for just a single day). It is the interbank rate (the rate used between banks) used within the European Union and is calculated daily and published in major newspapers. Interest rates on mortgages are often linked with this rate.

Euro
The common currency of the European Union (EU). Introduced on January 1st 1999 for use by banks and on January 1st 2002 as the currency used by the public for ordinary use. The euro has replaced the currencies of all the countries who joined the European Monetary Union in 1998. It is also being extended to other countries that have joined the EU since then.

European Directive
This is a law decided by the European Parliament which requires all states of the European Union to modify their own laws in order to respect it within a certain predetermined time period.

Exchange rate
This indicates the price at which money (a currency) is bought or sold for it to be converted into the currency of another country. [see “Exchange rate” card]


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H

Home banking
A banking service that lets current account holders manage their account from a computer, using the Internet. They can carry out operations or request information on their account.


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IBAN
International Bank Account Number: an international code that identifies a current account, and is needed to transfer money from one current account to another.

Insurance policy
A contract between a person and an insurance company in which certain insured risks are specified. The policy also sets out the conditions for compensation for damages in the event that the insured event actually takes place.

Interest share
The portion of each instalment of a mortgage (or loan repayment) that is used to repay the interest on the debt. The actual instalment consists of the capital share plus the interest share.

Intermediary
Person or operator whose role is to connect two subjects that are distant from one another, offering a specific service. An intermediary is said to be specialized when reference is made to a specific activity (for example, financial intermediation), whereas an intermediary is said to be authorized when its business is conducted based on authorization by a supervisory body. For example, banking operations or Money Transfer operations are financial intermediation activities that require authorization and are subject to monitoring (even if the one is very different from the other).


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M

Microcredit
There are many definitions for microcredit. Essentially, this is an economic development instrument that began in developing countries (thanks to Muhammad Yunus, an economist and banker who won the Nobel Peace Prize). Microcredit is now spreading, with features that have been adapted to the needs and characteristics of countries that are already highly developed. In general, microcredit involves small loans (under 25,000€, according to the European Commission’s definition) granted without collateral (security). Its main aim is to help persons with a low income to start up a small business or artisan activity. It is intended for people who would not otherwise have access to credit within the more traditional financial system.

Microfinance
A financial sector that provides financial services and products to persons who would otherwise be excluded from traditional financial circuits. Micro-finance can provide access to deposits, loans, insurance and savings accumulation products, with special cost and access conditions for persons with low incomes.

Micro-insurance
Insurance products with conditions (premiums, amounts) that are designed specifically for low-income individuals. The aim is to protect insurance-holders against risks such as illness, accident or theft. Insurance policies also give holders the possibility, over time, to accumulate protected capital that can be used for future expenses.

Mortgage
A form of loan that a bank gives to purchase (or refurbish) a house, usually over a long period (5 or more years). The money has to be paid pack in instalments that can be fixed or variable. The mortgage includes an interest rate to be paid on the money lent and the property itself acts as collateral (security) against the loan.

Mortgage Instalment
A payment made periodically to pay back money borrowed for a mortgage. The instalment has to be paid by a fixed date which can be monthly, quarterly (every 3 months), biannually (every 6 months), etc. It is generally made up of two parts: one part is used to pay off the loan itself and the other part to pay the interest on the loan.

Mutual funds
A financial product that invests the savings of many separate investors in stocks and/or bonds. There are various types of funds. For example, they can invest in stocks, bonds or other types of financial instruments, and they can invest in Italy, Europe or in other countries. Each fund carries a certain risk and a different profit and loss potential.

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O

Operators
These are the various intermediaries that perform money transfers. Italian law requires that the operator be enrolled in a specific register kept by the Bank of Italy in order to transfer money from one country to another. The main operators in Italy which send remittances are money transfer operators, banks and Poste Italiane. [see “Selecting an operator” card]

Overdrafts
A kind of loan that a bank gives. The bank sets in advance the maximum amount of money available through the overdraft, which requires specific guarantees. The money can be used, if needed, through the person’s current account. It can be used a bit at a time until the set limit is reached.


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Passbook
A savings instrument issued by a bank. The passbook (also known as “bankbook”) is an actual booklet in which all pay-ins and withdrawals relating to a specific savings account are recorded. For each operation, the balance is also recorded: the amount of money deposited and available in the account. Savings account holders must take their passbook with them for any operations and transactions.

Poste italiane
The Italian Postal Service. Poste Italiane offers traditional postal services as well as banking products and services under the Banco Poste brand. Banco Poste also provides remittance services.

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Recipient
This is the person who receives the money.


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Sender
This is the person who makes the remittance, i.e. the one who sends the money.

Speed
Indicates the time required for money sent to be available for withdrawal by the recipient. [see “What should be considered before sending the remittance?” card]

Supervisory Authorities
These are all of the bodies that perform supervision of the financial system and its professionals for the protection of investors and in general those who use a financial product or service. In Italy this task is entrusted to a group of bodies, each of which oversees a specific area: the Bank of Italy (monitors the banking system and the payments system, Consob (Commissione Nazionale per le società e la borsa – National Commission for Listed Companies and the Stock Exchange, monitors the Stock Exchange), ISVAP (Istituto di Vigilanza sulle Assicurazioni Private – Supervisory Authority for Private Insurance Undertakings, monitors the insurance sector), COVIP (Commissione di vigilanza sui fondi pensione – Supervisory Commission on pension funds, monitors pension funds), AGCM (Autorità Garante della concorrenza e del mercato – Antitrust Authority, monitors competition on all financial markets).

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U

Usury
A crime that occurs when a person or financial operator gives someone a loan at a rate of interest considered illegal. These illegal rates are so high that it is impossible or extremely difficult to repay the loan. This forces the debtor (borrower) to accept very unfavourable conditions. The Bank of Italy periodically sets a maximum limit for interest rates. Anyone charging an interest rate higher than this limit is committing the crime of usury. The limit set by the Bank of Italy varies, depending on the type of financial operator. The Effective Annual Rate (EAR) is used as the point of reference.


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