The upcoming phase-out of the interbank reference rate (IBOR) in favour of alternative risk free reference rates (RFR) means notable changes in the global financial system. IBOR will be terminated, as its reliability and robustness has been challenged in recent years, and hence the aim of the new RFR regime is to make sure that in the future, reference rates will be transaction based and more transparent.
Although the changes have not yet been agreed upon in detail, it is agreed that IBOR rates, including EURIBOR, LIBOR and EONIA, will either cease to exist or undergo changes to their calculation method. The financial industry, including Danske Bank, is now working with relevant authorities to determine the new alternative reference rates and new calculation methodologies. It is the ambition of Danske Bank to ensure a quick adoption and a smooth transition for our customers to the new regime.
Danske Bank monitors the developments on a continous basis. This page will be updated on a regular basis.
What's to be expected - for the time being
Introduction of €STR as an addition to EONIA
Eonia® (Euro OverNight Index Average) is the effective overnight reference rate for the euro. It is computed as a weighted average of all overnight unsecured lending transactions in the interbank market, undertaken in the European Union and European Free Trade Association (EFTA) countries
€STR (Euro Short Term Rate) is the rate which reflects the wholesale euro overnight borrowing costs of euro area banks.
From EURIBOR to Hybrid EURIBOR?
EURIBOR® is the rate at which Euro interbank term deposits are offered by one prime bank to another prime bank within the EMU zone, and is calculated at 11:00am (CET) for spot value (T+2).
‘Hybrid’ EURIBOR is the rate at which wholesale funds in euro could be obtained by credit institutions in the EU and EFTA countries in the unsecured money market.