Glossaire

Product bundling is a marketing practice that involves selling a range of different goods or services as a unique end product.There are different types of product bundling.Closed bundle: the customer has no option but to purchase all the products in one set.Open bundle: the customer has to purchase a minimum quantity of products and can add optional products to the bundle, to obtain additional advantages.Dynamic bundle: the customer can create the bundle or set of products or services they need to receive advantageous conditions.Product bundling is a system that has been used in diverse areas and is common in imperfectly competitive markets, such as telecommunications, software industries or in the insurance and banking sectors, where oligopolies or monopolistic practices are in play.

Quantitative easing (QE) is an unconventional monetary policy tool that consists in a large-scale purchasing of assets by a central bank using money that it has newly created.It is more colloquially referred to as "printing money", though no actual banknotes are printed. Merely, money is electronically "created".QE aims to raise the price of government bonds while simultaneously driving down their yields. This is a method used to push banks to invest in riskier assets and lend more to businesses and individuals.These monetary stimulus measures have a direct impact on the exchange rate, as it causes the depreciation of the currency. In the Eurozone, for instance, only the expectation of a 18-month long QE programme announced by the European Central Bank at the start of 2015 triggered a sharp depreciation in the euro, that reached its lowest level in 9 years against the U.S. dollar.Prices of commodities, including precious metals, and stocks, tend to rise when QE is in action. European stock markets climbed to their highest levels in 7 years in expectation of the ECB QE programme, which involved the purchase of €1.1 trillion of assets.The U.S. stock market experienced sustained highs largely as a result of the 6 year long QE programme implemented by the Federal Reserve, which ran from 2008 to 2014.

The quote currency is the second currency appearing in a currency pair quotation. The quote currency quoted expresses the number of units of that currency that are equal to one unit of the base currency. For example, if the EUR-USD is quoted at 1.25, EUR is the base currency, and USD is the quote currency. It means, in this example, that one EUR is worth 1.25 USD. In most quoting conventions, USD is the base currency for emerging market currencies: USD-BRL, USD-TRY, USD-RBL, etc. In futures markets, which are mostly based in the United States, the quote currency is always the U.S. dollar.

In a currency pair, the quote currency interest rate is the interest rate set by the central bank that issues the quote currency.In FX markets, currencies are quoted in relation to other currencies and represented in pairs. In the EUR/USD pair, for instance, the euro is the base currency and the dollar is the quote currency, so in this example, the quote currency interest rate is the rate set by the US Federal Reserve.Interest rates are a fundamental element in currency forward contracts. The differential between the interest rates of the base and quote currencies defines the forward points that are added or subtracted to the exchange rate to determine the forward rate.

Reconciliation is an accounting concept that refers to the process of confirming that a set of two records are in agreement.Payment reconciliation is an important task for accounting teams. It involves comparing an account payable with what has actually been paid or, in the case of an account receivable, with the actual incoming payment, to report any possible discrepancies.This process is generally performed at the close of each financial period and entails a thorough examination of all account balances, which in the case of international businesses working with different currencies, can become complex and time-consuming.To minimise manual reconciliation and free up the accounting department from administrative tasks, software tools like Kantox currency accounts make it possible to automate some steps in the collection and reconciliation processes.Currency accounts and virtual IBANs are a cost-efficient solution for international businesses to design a streamlined collection process, with one IBAN per currency or even per client. This facilitates payment originator identification and simplifies reconciliation.

Reference exchange rates are a set of daily foreign exchange rates published by leading central banks. Reference exchange rates are used by companies and other participants in FX markets. They are based on a regular daily concertation procedure between the central bank and leading commercial banks. Reference exchange rates are published for information, not trading, purposes. They are often used as a valuation tool, or in annual financial statements and tax reports of corporations, as well as in statistical publications and economic analyses.

Repatriation of profit is the ability of a firm to send foreign‐earned profits or financial assets back to the firm's home country in hard currency such as USD, EUR and others, after meeting the host nation's tax obligations. Proponents of profit repatriation argue that it encourages foreign direct investments (FDIs). Opponents argue that profit repatriation boosts another country's economy. Accordingly, different countries impose different restrictions for profit repatriation.

The reporting currency is the monetary unit used by a firm to record its transactions and to present its financial statements. The reporting currency is also known as the accounting currency or presentation currency. In most cases, the reporting currency is also the firm’s ‘functional currency’, i.e. the currency in which it primarily generates and expends its cash. A company can decide to present its financial statements in a currency different from its functional currency, for example when preparing a consolidated report for its parent in a foreign country. While a company can choose its reporting currency, it cannot change its functional currency.

A reserve currency is a currency that central banks hold as part of their foreign exchange reserves. This currency is often used for their international transactions. There are several features of an international reserve currency: a large transaction area, stable monetary policy, absence of controls, a strong central state, some significant backing in terms of precious metals, a sense of permanence, and low interest rates.

A restricted currency, also known as ‘blocked’ or non-convertible currency, is the monetary unit of a country where holders of the currency do not have the right to convert it freely at the going exchange rate into any other currency. A currency is considered to be restricted if it fulfills one or more of the following three criteria about usability, exchangeability and market value: it cannot be used for all purposes without restrictions; it cannot be exchanged for another currency without limitations; It cannot be exchanged at a given exchange rate.