Firms must prepare for reference rate transition – ECB working group
New €STR rate will be recalculated on same day if major errors are detected, report says
Financial institutions will have to make major changes to prepare for a new short-term eurozone reference rate, a European Central Bank industry working group said.
The ECB announced in March that it would replace the Euro OverNight Index Average (Eonia), with the euro short-term rate (€STR).
It said then it would use “a new methodology” that incorporated Eonia. This meant the old rate could “be used in existing contracts for a limited period to allow for a smooth transition” between the two
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