Euro Interbank Offered Rate (Euribor) Definition, Uses, vs. €STR

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Updated August 16, 2024
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What Is the Euro Interbank Offered Rate (Euribor)?

The Euro Interbank Offered Rate (Euribor) is a reference rate constructed from the average interest rate at which eurozone banks offer unsecured short-term lending on the inter-bank market. Loan maturities used to calculate Euribor often range from one week to one year. Euribor is the benchmark rate with which banks lend or borrow excess reserves from one another over no more than 12 months. Often structured as repurchase agreements (repos), these loans help maintain bank liquidity and ensure that excess cash can generate an interest return rather than sit idle.

Key Takeaways

  • Euribor is an overnight interbank rate comprised of the average interest rates from a panel of large European banks that are used for lending to one another in euros.
  • It has various maturities in which each maturity has its own interest rate.
  • Euribor is calculated by a benchmark administrator called Global Rate Set Systems Ltd. and offered by the European Money Markets Institute (EMMI).

Understanding the Euro Interbank Offered Rate (Euribor)

The Euro Interbank Offered Rate is a set of five money market rates corresponding to different maturities: the one-week, one-month, three-month, six-month, and 12-month rates. These rates are updated daily and represent the average interest rate that eurozone banks charge each other for uncollateralized loans.

Euribor rates are an important benchmark for a range of euro-denominated financial products, including mortgages, savings accounts, car loans, and various derivatives securities. Euribor's role in the eurozone is analogous to SOFR, which replaced LIBOR in 2023, in Britain and the United States.

Who Contributes to the Euribor Rate?

There are 19 panel banks that contribute to Euribor. These are the financial institutions that handle the largest volume of eurozone money market transactions. As of August 2024, these panel banks include:

Bank Country
Raiffeisen Bank International AG  Austria 
Belfius Belgium 
Barclays  United Kingdom 
BNP Paribas  France 
Crédit Agricole s.a.  France 
HSBC Continental Europe  France 
Natixis   France 
Société Générale  France 
Deutsche Bank  Germany 
DZ Bank  Germany 
Intesa Sanpaolo Italy
UniCredit Italy
Banque et Caisse d'Épargne de l'État Luxembour
ING Bank Netherlands
Caixa Geral De Depósitos Portugal
Banco Bilbao Vizcaya Argentaria Spain
Banco Santander Spain
CECABANK Spain
CaixaBank Spain

Euribor vs. €STR

While both Euribor and the Euro Short-Term Rate (€STR) are interest rates available in euros, there are some differences. Euribor indicates the rate at which European banks can borrow money in euros from one another. €SRT, on the other hand, is a backward-looking rate based on overnight borrowing information of European banks at market rates.

Euribor is a forward-looking rate of five different maturities, ranging from one week to 12 months. Additionally, €SRT is considered to be a risk-free rate because it does not include significant term risk or bank credit risk.

What Is an Interbank Lending Rate?

An interbank lending rate is the interest rate at which banks in a country or economic region lend to one another on a short-term basis. Banks tend to lend to one another to maintain liquidity and meet reserve requirements to ensure the proper health of an economic system. Interbank lending rates can affect other interest rates in a nation or economic region.

How Many Euribor Interest Rates Are There?

The Euribor rate is provided in five different maturities. These are rates for one week, one month, three months, six months, and 12 months.

What Was LIBOR?

LIBOR was the London Interbank Offered Rate which was an interest rate benchmark for short-term loans between global banks. This rate was the globally accepted rate for lending between banks until it was phased out in 2023. It was replaced by the Secured Overnight Financing Rate (SOFR).

Is the Euro Overnight Index Average Still Used?

Euro Overnight Index Average (EONIA) was the average interest rate at which European banks lent to one another in euros. EONIA was discontinued in 2022 and replaced with the Euro Short-Term Rate (€STR).

The Bottom Line

The Euro Interbank Offered Rate (Euribor) is a benchmark rate that indicates the average interest rate at which banks in the eurozone lend to each other on a short-term basis. The benchmark includes five rates with maturities ranging from one week to one year.

The Euribor rate influences various financial products, such as mortgages and savings accounts. It is based on contributions from 19 influential European banks, thereby reflecting the liquidity and financial condition of the eurozone.

Article Sources
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  1. The European Money Markets Institute. "Euribor."

  2. Euribor. "What Is Euribor."

  3. U.S. Securities and Exchange Commission. "What You Need to Know About the End of LIBOR – Investor Bulletin."

  4. Bank of England. "Transition From LIBOR to Risk-Free Rates."

  5. The European Money Markets Institute. "Euribor: Panel Banks."

  6. European Central Bank. "Overview of the euro short-term rate (€STR)."

  7. European Money Market Institute. "Euribor."

  8. U.S. Securities and Exchange Commission. "What You Need to Know About the End of LIBOR – Investor Bulletin."

  9. European Central Bank. "The Euro-Short Term Rate (€STR): Completing the Transition to the New Euro Benchmark."