Eonia

EONIA, the Euro Overnight Index Average, is a benchmark interest rate for the euro area that reflects the average rate at which unsecured overnight interbank deposits are issued by major Eurosystem banks. It served as a reference rate for a wide range of euro-denominated money market instruments and derivatives, including certain term structures and legacy contracts, and was published daily on business days.

Calculation: The rate is derived from unsecured overnight lending transactions and quotes submitted by a panel of participating banks active in the euro money market. The calculation aggregates these inputs to produce an average unsecured overnight funding cost in euros.

Administration and scope: EONIA was traditionally administered as a benchmark rate for the euro money market by market infrastructure bodies in cooperation with the European Central Bank. It applied to overnight maturity; it did not incorporate credit risk premiums of individual banks in the same way as longer-term rates.

Transition to €STR: In 2019, authorities introduced the Euro Short-Term Rate (€STR) as the new euro risk-free benchmark. €STR is based on actual wholesale euro unsecured overnight lending transactions and is published by the European Central Bank. The market gradually shifted away from EONIA; EONIA has been superseded for most new contracts, while legacy instruments with remaining exposure were transitioned using spread adjustments or fallbacks to €STR.

Today: The euro money market reference rate is €STR, with EONIA largely retired from official use. The transition reflects a broader move toward transaction-based, risk-free benchmarks in line with international reform efforts.