EURO ZONE BENCHMARKS AND THEIR IMPORTANCE IN ENSURING THE FUNCTIONING OF RISK-FREE FINANCIAL MARKETS

Abstract

Interest rate benchmarks are important for the functioning of financial markets and for the transmission of monetary policy. Financial markets are largely based on such indices as a reference in financial contracts. The absence of benchmarks could trigger financial market disruptions, with a possible significant negative impact on the transmission of monetary policy decisions of the European Central Bank and on the Eurosystem's ability to contribute to the smooth implementation of policies promoted by the competent authorities in terms of financial system stability. On September 21, 2017, the Governing Board of the European Central Bank announced its decision to develop a new euro rate, based on data available from the Eurosystem, which complements the benchmarks produced by the private sector and serves as a reserve effect.

Keywords

• benchmark indices
• euro interbank offered rate
• euro short-term rate