Banking Alert! ECB’s progress to identify and recommend alternative short-term risk-free rates (RFR)

The ECB (European Central Bank) will begin publishing the ESTER (Euro Short-Term Rate) by October 2019, to be used to complement existing benchmark rates produced by the private sector.

The ECB decided to publish an overnight benchmark because of the potential adverse impact on the transmission mechanism of monetary policy and the repercussions for financial stability that could result from the absence of a reliable private benchmark.