Euribor is short for Euro Interbank Offered Rate. The Euribor rates are based on the interest rates at which a panel of European banks borrow funds from one another. In the calculation, the highest and lowest 15% of all the quotes collected are eliminated. The remaining rates will be averaged and rounded to three decimal places. Euribor is determined and published at about 11:00 am each day, Central European Time.
When Euribor is being mentioned it is often referred to as THE Euribor, like there’s only 1 Euribor interest rate. This is not correct, since there are in fact 5 different Euribor rates, all with different maturities (until november 1st 2013, there were 15 maturities). See current Euribor rates for an overview of all rates.
Euribor was first published on 30 December 1998 (value 4 January 1999). 1 January 1999 was the day that the Euro as a currency was introduced. In the years before, a lot of domestic reference rates like PIBOR (France) and Fibor (Germany) existed.
Since the Euribor rates are based upon agreements between many European banks, the level of the rates is determined by supply and demand in the first place. However there are some external factors, like economic growth and inflation which do influence the level of the rates as well.
The Euribor rates are important because these rates provide the basis for the price or interest rate of all kinds of financial products, like interest rate swaps, interest rate futures, saving accounts and mortgages.
The panel banks are the banks with the highest volume of business in the euro zone money markets. The panel consists of banks with a first class credit standing, high ethical standards and an excellent reputation. For the full list of all the panel banks, click here.
Euribor and LIBOR are comparable base rates. Euribor is the average interbank interest rate at which European banks are prepared to lend to one another. LIBOR is the average interbank interest rate at which a selection of banks on the London money market are prepared to lend to one another. Just like Euribor, LIBOR comes in different maturities. The main difference is that LIBOR rates come in different currencies. We would like to refer to current LIBOR interest rates and background information on LIBOR, in case you are interested in additional information on LIBOR.