Summary of responses to the ECB’s first public consultation on developing a euro secured overnight interest rate

The European Central Bank has published a summary of responses it received following its first consultation paper on a new euro unsecured overnight interest rate, published in November 2017. Responses include:

• a vast majority of respondents agreed with the definition suggested in the consultation document and expected the rate to be generally accepted by the public as a reference rate;
• nearly all respondents agreed that a rate reflecting banks’ daily borrowing costs would provide a meaningful reference in financial contracts, including derivatives, and for valuation purposes; and
• respondents expected the new rate to be applied to all those contracts and types of valuations currently referencing the Euro Overnight Index Average.