Euro Interbank Offer Rate (Euribor)
What Is the Euro Interbank Offer Rate (Euribor)?
Euribor, or the Euro Interbank Offer Rate, is a reference rate that is built from the average interest rate at which eurozone banks offer unsecured short-term lending on the inter-bank market. The maturities on loans used to compute Euribor frequently range from multi week to one year.
This is the benchmark rate with which banks loan or borrow excess reserves from each other over short periods of time, from multi week to 12 months. These short-term loans are frequently structured as repurchase agreements (repos) and are intended to keep up with bank liquidity and to ensure that excess cash can generate an interest return instead of sit idle.
Understanding the Euro Interbank Offer Rate (Euribor)
The Euro Interbank Offer Rate (Euribor) as a matter of fact alludes to a set of eight money market rates corresponding to different maturities: the one-week, fourteen day, one-month, two-month, three-month, half year, nine-month, and year rates. These rates, which are refreshed daily, address the average interest rate that eurozone banks charge each other for uncollateralized loans.
Euribor rates are an important benchmark for a scope of euro-denominated financial products, including mortgages, savings accounts, vehicle loans, and different derivatives securities. Euribor's part in the eurozone is closely resembling LIBOR in Britain and the United States.
Who Contributes to the Euribor Rate?
There are 20 panel banks that add to Euribor. These are the financial institutions that handle the largest volume of eurozone money market transactions. Starting around 2018, these panel banks include:
- Belfius (Belgium)
- BNP Paribas (France)
- HSBC France
- Natixis (France)
- Cr\u00e9dit Agricole (France)
- Soci\u00e9t\u00e9 G\u00e9n\u00e9rale (France)
- Deutsche Bank (Germany)
- DZ Bank (Germany)
- National Bank of Greece
- Intesa Sanpaolo (Italy)
- Monte dei Paschi di Siena (Italy)
- UniCredit (Italy)
- Banque et Caisse d'\u00e9pargne de l'\u00e9tat (Luxembourg)
- ING Bank (Netherlands)
- Caixa Geral De Dep\u00f3sitos (Portugal)
- Banco Bilbao Vizcaya Argentaria (Spain)
- Banco Santander (Spain)
- CECABANK (Spain)
- CaixaBank (Spain)
- Barclays (Britain)
The Difference Between Euribor and Eonia
Eonia, or the Euro Overnight Index Average, is likewise a daily reference rate that communicates the weighted average of unsecured overnight interbank lending in the European Union and the European Free Trade Association (EFTA). It is calculated by the European Central Bank (ECB) in light of the loans made by 28 panel banks.
Eonia is like Euribor as a rate utilized in European interbank lending. The two benchmarks are offered by the European Money Markets Institute (EMMI). The fundamental difference among Eonia and Euribor is the maturities of the loans they depend on. Eonia is an overnight rate, while Euribor is really eight different rates in light of loans with maturities shifting from multi week to 12 months.
The panel banks that add to the rates are likewise different: simply 20 banks add to Euribor, rather than 28. At last, Euribor is calculated by Global Rate Set Systems Ltd., not the ECB.
Features
- Euribor is an overnight interbank rate contained the average interest rates from a panel of large European banks that are utilized for lending to each other in euros.
- Euribor has different maturities in which every maturity has its own interest rate.
- Euribor is calculated by a benchmark administrator called Global Rate Set Systems Ltd. also, offered by the European Money Markets Institute (EMMI).
