Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Euro Interbank Offered Rate (EURIBOR)

What it is:

Euro Interbank Offered Rate (EURIBOR), is the rate at which European banks offer to lend unsecured funds to each other in the euro market.

How it works (Example):

EURIBOR is sponsored by the European Banking Federation which represents some 5,000 banks and by the Financial Markets Association.

With the introduction of the Euro in 1999, European banks realized the need for a new interbank reference rate within the European Union.  To answer this need, the EURIBOR was adopted as the benchmark rate for the large Euro money market.

EURIBOR is also the underlying rate for many derivatives, both over-the-counter and exchange-traded.

Why it Matters:

EURIBOR supplies the foundation for some of the world's most liquid and active interest rate markets. This has become the benchmark for short term interest rates within the EU and their respective partner banks.