May 31, 2019 / 9:53 AM / 6 months ago

Eonia rate to be fixed above ECB's new reference rate

FRANKFURT (Reuters) - The euro zone’s Eonia reference rate, a gauge of how much banks charge for lending to each other for a day, will be priced at 8.5 basis points over the European Central Bank’s new reference rate, €STR, from October 2, the ECB said on Friday.

Eonia, discredited by low volumes, is set to be discontinued and replaced by €STR, with banks gradually shifting their contracts to the ECB’s new rate.

To make the transition as smooth as possible, a private sector working group recommended that during the transition, the spread between the two rates should be fixed, rather than float based on bank contributions.

(This story corrects to remove erroneous reference to allegations of fraud in paragraph two)

Reporting by Balazs Koranyi; Editing by Raissa Kasolowsky

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