Difference Between Eonia and Euribor

Eonia vs Euribor

Euribor and Eonia are two different interbank interest rates offered by European banks.

Euribor
“Euribor” stands for “Euro Interbank Offered Rate.” It was first published and introduced on December 30th, 1998. The Euro currency was introduced January 1st, 1999. Before the Euribor was published and the Euro currency introduced, there were other domestic rates like Fibor in Germany and PIBOR in France.

Euribor rates are decided according to the interest rates which are offered amongst the 57 European banks. The European banks borrow the funds from each other on the Euribor rates. The rates depend upon the supply and demand and also on external factors like inflation and economic growth. There are 15 different rates and not just 1; all these rates have different maturities. The maturities vary ranging from 1-3 weeks to 1-12 months.

Euribor rates are very important as they help in providing interest rates for various financial products, for example, saving accounts, interest rate swaps, future of interest rates, etc. Euribor rates are calculated by eliminating 15 per cent of the highest and lowest quotes collected. The rates remaining are then rounded and averaged to three decimal places. These rates are published every day at 11:00 a.m., Central European Time.

The banks which form the European Panel are those banks in the euro market which have the highest business volume. The banks that make the panel have excellent reputations, excellent credit standings, and high standards in ethics.

Eonia
“Eonia” stands for “Euro Overnight Index Average.” It was first published on January 4th, 1999. The value was based upon the transactions that took place between January 3rd, 1999 after the RTGS closed and January 4th, 1999 before the RTGS closed.

Eonia is the average of all unsecured lending that takes place overnight amongst the interbank market. There are over 50 banks selected to be on the Eonia panel. They are usually the same banks included in the Euribor panel. The legal sponsor of Eonia is the European Banking Federation. It is computed by the Central Bank and distributed by Reuters.
Eonia is calculated based upon the assets created overnight by the interbank before the RTGS (Real Time Gross Settlement) system closes at 6:00 p.m. Central European Time. It is published by Reuters every day before CET 7:00 p.m.
The banks which form the Eonia panel have excellent credit ratings, high money market volume, and excellent credibility with the highest ethics.

Summary:

1.“Euribor” stands for “Euro Interbank Offered Rate”; “Eonia” stands for “Euro Overnight Index Average.”
2.Euribor includes term loans; Eonia is the overnight interest rate in the Eurozone and thus does not include term loans.
3.Euribor was first published and introduced on December 30th, 1998; Eonia was first published on January 4th, 1999.
4.Euribor rates are calculated by eliminating 15 per cent of the highest and lowest quotes collected; Eonia is calculated based upon the assets created overnight by the interbanks before the RTGS.
5.Euribor rates are published every day at 11:00 a.m. Central European Time; Eonia is published by Reuters every day before 7:00 p.m. Central European Time.

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