Business, Legal & Accounting Glossary
Eonia is computed as a weighted average of all overnight unsecured lending transactions in the interbank market, undertaken in the European Union and European Free Trade Association countries by the Panel Banks. It is reported on an ACT/360-day count convention and is displayed to three decimal places. “Overnight” means from one TARGET day to the next. The panel of reporting banks is the same as for Euribor, and a list is provided by the overseers of the publication of the index. There is no clear definition of ‘interbank market’ leading to the potential of subjective assessment of what is an ‘interbank loan’, albeit all panel banks are subject to the Eonia Code of Conduct.
EONIA is one of the reference rates for interbank lending within the Eurozone (i.e. the Euro Interbank Offered Rate, EURIBOR, is the other one). EONIA is an overnight interest rate within the eurozone and unlike the EURIBOR does not include term loans. The first release of EONIA was on January 4th, 1999 for the value of EONIA based on transactions between January 3rd, 1999 after the close of the real-time gross settlement (i.e RTGS) and January 4th, 1999 before the close to the RTGS. EONIA is based on a weighted average of interest rates for unsecured overnight loans quoted by the EONIA panel banks by the close of the real-time gross settlement on each business day (i.e. 6 pm, Brussels time). Over 50 banks, mostly European banks, are selected to be on the EONIA panel based on their premium credit rating and the high volume of their money market transactions conducted within the Eurozone. Banks on the EONIA panel are the same banks included in the EURIBOR panel. The European Banking Federation (i.e. FBE or Fédération Bancaire de l’ Union Européenne) is the legal sponsor of EONIA. The European Central Bank computes the EONIA and Reuters is responsible for distributing the EONIA each business day around 7 pm, Brussels time.
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This glossary post was last updated: 15th February, 2020