Reference interest rate Euribor to be reformed

The key reference interest rate in Europe, the Euribor (Euro Interbank Offered Rate), will be reformed during 2019.

The Euribor is generally used as a reference interest rate for home loans, consumer loans and corporate loans. The changes will not have any practical impact on customers’ Euribor-linked contracts, and the change will not require any actions from customers. 

What will happen in the reform?

Determination methodology to change 

The reform involves changing the reference rate determination methodology. In future, interest rate quotes given by banks in the Euribor panel will be based on realised money market transactions. If there are not enough transactions, other market information will be used. All panel banks will adopt the new determination methodology by the end of 2019. The change is not expected to have a significant impact on reference interest rate levels.

Change in interest day method earlier this year

Up until March 2019, the Euribor was published by using two different interest day methods, actual days/365 and actual days/360. Since the Euribor administrator EMMI no longer publishes Euribor calculated on the 365 basis,  OP takes care of the calculation itself. 

The Euribor is the shared reference interest rate of the euro area. It is a reference rate that describes the price at which banks in the euro area can acquire euro-denominated funds on the wholesale market. Euribor reference interest rates are published daily for five time periods: 1 week and 1, 3, 6 and 12 months. 

The changes will not affect the interest rates paid by customers, and they do not require any action on the part of our customers.