You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
What is EuriBor? And what does it tells?
- Thread starter philipatt
- Start date
http://www.investopedia.com/terms/e/euribor.asp
The rate of interest at which panel banks borrow funds from other panel banks, in marketable size, in the EU interbank market.
In other words, this is the rate at which participant banks within the European Union money market will lend to another participant bank in the EU money market. Because banks involved with Euribor are the largest participants in the EU money market, this rate has become the benchmark for short-term interest rates.
The rate of interest at which panel banks borrow funds from other panel banks, in marketable size, in the EU interbank market.
In other words, this is the rate at which participant banks within the European Union money market will lend to another participant bank in the EU money market. Because banks involved with Euribor are the largest participants in the EU money market, this rate has become the benchmark for short-term interest rates.
Simply, economic definitions aside, euribor is calculated as such: 100 - interest rate = 3 month euriobor price. So, if front month 3 mth euribor (March 08) is quoted as 95.670 it implies that the implied interest rate for March 08 is 100 - 95.670 = 4.33%
Obviously there are further out months quoted, so you get the implied rate for the curve. In a nutshell, Interest rate down, euribor up and vice versa.
Obviously there are further out months quoted, so you get the implied rate for the curve. In a nutshell, Interest rate down, euribor up and vice versa.
Spreads between interbank rates (like LIBOR and EURIBOR) and short-term government rates (like T bills) are an indication of short-term liquidity/funding conditions in the banking system. When those spreads pop up (like they did in August 07 and then again in Dec 07) it indicates decreasing liquidity.