Czech National Bank Preparation Worksheet Vocabulary

Vocabulary flashcards covering fundamental banking, currency, tax, and monetary policy terms from the Czech National Bank preparation worksheet.

Bank

An institution providing financial services. A bank is a joint stock company (a.s.), which is entitled by a bank licence to carry out bank activities (i.e. accept deposits and provide loans).

Price

Monetary expression of the value to goods and services.

Budget

Basic financial plan which includes a list of planned incomes and expenditures.

Current account

An account with a bank, onto which a client can deposit money or withdraw them anytime. Deposits and withdrawals can be carried out in many various ways in cash or by non-cash transfers.

Payment card

A tool used for non-cash payments of goods and services or cash withdrawals. The card can be used to pay for goods and services at most retailers and to withdraw cash from ATMs.

Debit card

A payment card associated with a positive balance on the current account. The client can only pay up to the available account balance.

Credit card

Payment card, with the possibility of taking out a loan. With a credit card, the client has money lent by the bank up to the agreed limit.

Cash

Physical money, i.e. banknotes and coins.

PIN

Personal Identification Number – a number for authorization of payments made by card.

Deposit

Money inserted into the account, whether in cash or non-cash.

Credit/loan

A financial service where a lender lends a borrower money to cover his (the borrower's) personal needs. The borrower is obliged to return the money within the agreed deadline and pays interest for providing the loan.

Interest

The reward for lending money, the price for the use of foreign capital paid by the borrower to the lender. Price of money.

Forgery/counterfeit

An imitation made with the intention of passing it off as a genuine banknote or coin. This is fraud and a crime.

Circulating medium/currency

Cash (banknotes and coins) in circulation. Banknotes and coins enter circulation the moment they leave the central bank.

VAT

Value Added Tax – one of the most important revenues of the state budget. Everyone pays it when purchasing most goods and services, which is why it is called a universal tax.

APRC

Annual Percentage Rate of Charge. It includes the total cost of the consumer loan, including the interest rate. The APRC shows how much the loan will actually cost; the lower the APRC, the more advantageous the loan.

Inflation

An increase in the general price level in an economy over a period of time.

Deflation

A long-term decline in most prices in the economy.

Price stability

The ability to maintain constant purchasing power of the money over time, characterized by no sharp inflation peaks or fast inflation, ensuring a stable economy only.

Monetary policy

Policy whose role is to ensure low, stable and predictable inflation using monetary instruments, the most important of which are interest rates (e.g. discount rate, REPO rate and lombard rate).

Inflation rate

Percentual inflation change in a given period of time.

Inflation targeting

The main goal of monetary policy involving reaching the precise inflation rate by means of monetary instruments, i.e. main interest rates, operations on foreign exchange market and mandatory minimum reserves of commercial banks at the CNB.