"Did You Request the Euro-Rate or the Euro Euro-Rate?"

A question has come up regarding what you should name the interest rates for deposits and loans denominated in euros (€) that are made in either the onshore or the offshore market. It’s a good question because traditionally, interest rates in the offshore market have been called Eurorates. So what should we call the interest rate on an offshore account denominated in €: A Euro eurorate?

Here are the current market naming conventions.

Onshore Euros

Onshore euros (€) refer to bank deposits in any of the 11 EMU nations (12 counting Greece in January 2001) that are denominated in €.

• EONIA – The Euro Overnight Index Average, an index of overnight euro interest rates from across the EMU compiled by the European Banking Federation

• Euribor – The euro interbank offered rate, meaning the interbank lending rate for € within the EMU. Euribor comes in 1, 3, 6, 12-month and other maturities. Note that the naming convention roughly conforms to the usual

• LIBOR – London Interbank Offered Rate
• PIBOR – Paris Interbank Offered Rate
• TIBOR – Tokyo Interbank Offered Rate

Offshore Euros

Offshore euros (€) refer to bank deposits NOT in any of the 11 EMU nations (12 counting Greece in January 2001) that are denominated in € - i.e. deposits in London, Zurich, New York, Singapore, etc.

• EURONIA – The offshore counterpart to EONIA, meaning an index of overnight rates on euros measured in the offshore markets.

• Euro Libor – The London Interbank Offered Rate for euros (€). Again, you’ll find 1, 3, 6, and 12-month Euro Libor rates.

For current rates, check the FT at http://www.ft.com/cgi-bin/pft/monrates.pl/report

For more information about these conventions and market activity in each segment, see "Practical Issues Arising from the Euro," published periodically by the Bank of England and available at their web site www.bankofengland.co.uk/euro/piq.htm.

Richard Levich, November 10, 2000