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The Euro Interbank Offered Rate (or Euribor) is a daily reference rate
Reference rate

A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of LIBOR rate, but it can take many forms, such as a consumer price index, a house price index or an unemployment rate....
 based on the averaged interest rate
Interest rate

An interest rate is the price a borrower pays for the use of money they do not own, for instance a small company might borrow from a bank to kick start their business, and the return a lender receives for deferring the use of funds, by lending it to the borrower....
s at which bank
Bank

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money....
s offer to lend unsecured
Unsecured loan

An unsecured loan is a loan that is not backed by collateral . Also known as a signature loan or personal loan.Unsecured loans are based solely upon the borrower's credit rating....
 funds to other banks in the euro
Euro

The euro is the official currency of 16 out of 27 European Union member state of the European Union . The states, known collectively as the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Republic of Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain....
 wholesale money market
Money market

In finance, the money market is the global financial market for short-term borrowing and lending. It provides short-term market liquidity funding for the global financial system....
 (or interbank market
Interbank market

The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms....
).

bor rates are used as a reference rate for euro-denominated forward rate agreement
Forward rate agreement

In finance, a forward rate agreement is a forward contract in which one party pays a fixed interest rate, and receives a floating interest rate equal to a reference rate ....
s, short term interest rate futures contract
Futures contract

In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a standardized quantity of a specified commodity of standardized quality at a certain date in the future, at a price determined by the instantaneous equilibrium between the forces of supply and demand among competing buy and sell orders...
s and interest rate swap
Interest rate swap

An interest rate swap is a derivative in which one party exchanges a stream of interest payments for another party's stream of cash flows. Interest rate swaps can be used by hedge to manage their fixed asset or floating capital assets and liabilities....
s, in very much the same way as LIBOR rates are commonly used for Sterling
Pound sterling

----The pound sterling , subdivided into 100 pence , is the currency of the United Kingdom, its Crown dependency and the British Overseas Territories of South Georgia and the South Sandwich Islands and British Antarctic Territory....
 and US dollar-denominated instruments.






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Euribor 2006 5a
The Euro Interbank Offered Rate (or Euribor) is a daily reference rate
Reference rate

A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of LIBOR rate, but it can take many forms, such as a consumer price index, a house price index or an unemployment rate....
 based on the averaged interest rate
Interest rate

An interest rate is the price a borrower pays for the use of money they do not own, for instance a small company might borrow from a bank to kick start their business, and the return a lender receives for deferring the use of funds, by lending it to the borrower....
s at which bank
Bank

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money....
s offer to lend unsecured
Unsecured loan

An unsecured loan is a loan that is not backed by collateral . Also known as a signature loan or personal loan.Unsecured loans are based solely upon the borrower's credit rating....
 funds to other banks in the euro
Euro

The euro is the official currency of 16 out of 27 European Union member state of the European Union . The states, known collectively as the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Republic of Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain....
 wholesale money market
Money market

In finance, the money market is the global financial market for short-term borrowing and lending. It provides short-term market liquidity funding for the global financial system....
 (or interbank market
Interbank market

The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms....
).

Scope

Euribor rates are used as a reference rate for euro-denominated forward rate agreement
Forward rate agreement

In finance, a forward rate agreement is a forward contract in which one party pays a fixed interest rate, and receives a floating interest rate equal to a reference rate ....
s, short term interest rate futures contract
Futures contract

In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a standardized quantity of a specified commodity of standardized quality at a certain date in the future, at a price determined by the instantaneous equilibrium between the forces of supply and demand among competing buy and sell orders...
s and interest rate swap
Interest rate swap

An interest rate swap is a derivative in which one party exchanges a stream of interest payments for another party's stream of cash flows. Interest rate swaps can be used by hedge to manage their fixed asset or floating capital assets and liabilities....
s, in very much the same way as LIBOR rates are commonly used for Sterling
Pound sterling

----The pound sterling , subdivided into 100 pence , is the currency of the United Kingdom, its Crown dependency and the British Overseas Territories of South Georgia and the South Sandwich Islands and British Antarctic Territory....
 and US dollar-denominated instruments. They thus provide the basis for some of the world's most liquid and active interest rate markets. Domestic reference rates, like Paris' PIBOR or Frankfurt's FIBOR merged into Euribor on EMU day on 1 January 1999.

Technical features

Official reference:


A representative panel of banks provide daily quotes of the rate, rounded to two decimal places, that each panel bank believes one prime bank is quoting to another prime bank for interbank term deposits within the Euro zone, for maturity ranging from one week to one year. Every Panel Bank is required to directly input its data no later than 10:45 a.m. (CET
Central European Time

Central European Time is one of the names of the time zone that is 1 hour ahead of Coordinated Universal Time. It is used in most European and some North African countries....
) on each day that the Trans-European Automated Real-Time Gross-Settlement Express Transfer system (TARGET
Target

Target refers to:Retail*Target Corporation, a U.S. mass merchandise retailer*Target , an Australian mass merchandise retailer Sporting*Target Center, arena in Minneapolis, Minnesota...
) is open. At 11:00 a.m. (CET), Reuters
Reuters

Reuters Group Limited is a United_Kingdom-based, Canadian controlled news agency and former financial market data provider that provides reports from around the world to newspapers and broadcasters....
 will process the Euribor calculation and instantaneously publish the reference rate on Reuters pages 248-249, which will be made available to all its subscribers and to other data vendors.

The published rate is a rounded, truncated mean
Truncated mean

A truncated mean or trimmed mean is a statistical measure of central tendency, much like the mean and median. It involves the calculation of the mean after discarding given parts of a probability distribution or Sampling at the high and low end, and typically discarding an equal amount of both....
 of the quoted rates: the highest and lowest 15% of quotes are eliminated, the remainder are averaged and the result is rounded to 3 decimal places.

Euribor rates are spot rates, i.e. for a start two working days after measurement day. Like US money-market rates, they are Actual/360
Day count convention

In finance, a day count convention determines how interest accrues over time for a variety of investments, including bonds, notes, loans, medium-term notes, swaps, and FRAs....
, i.e. calculated with an exact daycount over a 360-day year.

Euribor was first published on 30 December 1998 for value 4 January 1999.

Interest Rate Swaps

Interest rate swaps based on short Euribor rates currently trade on the interbank market
Interbank market

The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms....
 for maturities up to 50 years. A "five year Euribor" rate will be in fact referring to the 5 year swap rate vs 6 month Euribor. "Euribor + x basis points", when talking about a bond, will mean that the bond's cash flows have to be discounted on the swaps' zero-coupon yield curve
Yield curve

In finance, the yield curve is the relation between the interest rate and the time to Maturity of the debt for a given borrower in a given currency....
 shifted by x basis points in order to equal the bond's actual market price.

Eonia

The other widely used reference rate in the euro-zone is Eonia
Eonia

Eonia is an effective overnight rate computed as a weighted average of all overnight unsecured lending transactions in the interbank market. It has been initiated within the euro area by the contributing panel banks....
, also published by the European Banking Federation
European Banking Federation

The European Banking Federation is an organization of the European banking sector, representing interest of over 5000 European banks in 31 countries with combined assets of over 30,000 billion Euro and around 2.4 million employees....
, which is the daily average of overnight rates for unsecured interbank lending in the euro-zone, i.e. like the federal funds rate
Federal funds rate

In the United States, the Fed Funds Rate is the interest rate at which private depository institutions lend balances at the Federal Reserve to other depository institutions, usually overnight....
 in the US.

See also

  • Euro
    Euro

    The euro is the official currency of 16 out of 27 European Union member state of the European Union . The states, known collectively as the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Republic of Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain....
  • Eonia
    Eonia

    Eonia is an effective overnight rate computed as a weighted average of all overnight unsecured lending transactions in the interbank market. It has been initiated within the euro area by the contributing panel banks....
  • European Banking Federation
    European Banking Federation

    The European Banking Federation is an organization of the European banking sector, representing interest of over 5000 European banks in 31 countries with combined assets of over 30,000 billion Euro and around 2.4 million employees....
  • Prime rate
    Prime rate

    Prime rate, or Prime Lending Rate, is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, i.e., those with high credibility, though this is no longer always the case....


External links

  • Euribor Page on Wikinvest


Euribor reference rates are published on the pages 248-249 and 47860-66. Informative historical data can also be found at the .