What is Euribor

The Euribor (Euro InterBank Offered Rate) is the interest rate reported daily by the European Money Markets Institute (EMMI) as the average of the interest rates at which primary banks active in the euro money market, both in the eurozone and in the rest of the world, offer euro term interbank deposits to other primary banks.

A primary bank is a credit institution with high creditworthiness for short-term deposits, able to lend at competitive interest rates, known to be active in euro-denominated money market instruments, and with access to Eurosystem open market operations. Its inception coincided with that of the euro (January 4, 1999), and it replaced the various money market rates used in individual countries (in Italy the Ribor - Roma Interbank Offered rate - was used).

Euribor is calculated by Global Rate Set Systems Ltd (GRSS), a company specializing in the administration of benchmark indices (benchmarks), which acts as Calculation Agent on behalf of EMMI under a formal contract and with the application of operational standards defined in a Service Level Agreement.

Euribor is calculated as follows:

1. A simple average of the rates provided by the banks is calculated
2. The highest and lowest 15% of the rates received are excluded from the calculation
3. One rounds up to three decimal places

Panel banks provide data by 10:45 a.m. each day (Central European Time). Between 10:45 a.m. and 11:00 a.m. banks can correct the submitted data. At 11:00 a.m. GRSS makes the calculation and makes it public in real time, together with the rates provided by the panel banks.

There are various types of Euribor: 1-week, 1-month, 3-month, 6-month or 1-year. Until December 1, 2018, 2-week, 2-month and 9-month Euribor rates were also calculated and published. Euribor rates are widely used as a reference for short-term rates.

The Euribor rate most familiar to the general public is probably the six-month Euribor rate, which is normally used as a reference for calculating interest for variable-rate mortgages. Euribor plus a spread is used as the basis for determining the rate for the latter. For example: 6-month Euribor + 1.50%. If the 6-month Euribor rate on the day of the survey is 0.50%, the mortgage installment is set at 2.00% (0.50% + 1.50%).