Euro Short-Term Rate
The ECB's benchmark for unsecured overnight borrowing costs of euro-area banks, computed from reported money market transactions and the replacement for EONIA.
Also called: ESTR, euro STR.
€STR is built from the borrowing side of the euro money market statistical reporting, covering unsecured overnight deposits banks take from financial counterparties. Because it is unsecured, it embeds a small amount of bank credit risk that SOFR does not.
It trades slightly below the deposit facility rate in normal conditions, because some lenders in the reporting sample cannot access the ECB's facilities directly and will accept a little less.
Watching the €STR–DFR spread is one of the cleanest tests of whether a floor system is working: a widening gap means the floor is leaking.
The mechanics
- What it measures
- Unsecured overnight borrowing by euro-area banks from financial counterparties.
- Published by
- The European Central Bank, each TARGET business day.
- US analogue
- The effective federal funds rate — unsecured — rather than SOFR.
The common misreading
That €STR and SOFR are interchangeable across currencies. One is unsecured and one is secured; in a stress episode they move for opposite reasons.
Related terms
- Deposit Facility RateThe rate the ECB pays euro-area banks on overnight deposits at the Eurosystem — since 2022 the rate through which the ECB steers short-term euro rates.
- Secured Overnight Financing RateA broad measure of the cost of borrowing cash overnight secured by US Treasury collateral, published each morning by the New York Fed and the main US replacement for LIBOR.
- EurodollarA US dollar deposit held at a bank outside United States jurisdiction — dollars created offshore, beyond the Federal Reserve's direct reach.
Primary sources
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