New €STR overnight rate published
The euro short-term rate (€STR) is the new unsecured overnight rate which, as of 2 October 2019, is published by the ECB at 08:00 CET on each TARGET2 business day. The €STR stood at -0.549 % on its first day of publication, reflecting trading activity of 1 October 2019. Please take notice of the disclaimer of the ECB which the ECB published as administrator of the reference rate on the ECB’s website (please see the link provided below).
The overnight rate complements existing private sector reference rates and is also recommended as the new overnight reference rate for the euro area.
The euro short-term rate is calculated solely based on individual euro-denominated transactions conducted and settled on the previous business day. These are reported by euro area banks subject to reporting obligations in compliance with the Money Market Statistical Reporting (MMSR) Regulation.
Transparency and security
Starting on 2 October 2019, the reference rate that has been used up to now – the EONIA – will be calculated as the €STR plus a spread of 8.5 basis points. The introduction of a new benchmark became necessary after manipulations of existing reference rates such as the EURIBOR came to light. For this reason, the EU adopted a new Benchmark Regulation (BMR) in 2016: its stipulations include the requirement that all reference rates used in the Single Market are based on representative data as of January 2020. The aim is to ensure transparency and prevent manipulation when calculating the rates.