On September 13, 2018, the European Central Bank announced its recommendation of the Euro short-term rate - ESTER - as a euro risk-free rate by a private sector working group. The group also recommends that ESTER replaces the Euro overnight index average, EONIA, because EONIA no longer complies with the EU Benchmark Regulation and will be restricted from January 1, 2020. The recommendations of the working group are not legally binding.

According to the ECB, ESTER will also provide a basis for developing fallbacks for contracts referencing the EURIBOR because the reformed ESTER methodology will be assessed for compliance with the Benchmark Regulation in 2019. ESTER reflects wholesale Euro unsecured overnight borrowing costs of Euro area banks and will be produced by ECB by October 2019, at the latest.

The European Money Markets Institute announced the termination of the Repo Index Project on September 10, 2018. The EMMI is the administrator of both EONIA and EURIBOR and intends to focus on the transition of EONIA to the new rate and on reforming EURIBOR's methodology.

The press release is available at: https://www.ecb.europa.eu/press/pr/date/2018/html/ecb.pr180913.en.html, further details on the development of ESTER are available at: https://www.ecb.europa.eu/press/pr/date/2018/html/ecb.pr180628.en.html  and EMMI's announcement is available at: https://www.emmi-benchmarks.eu/assets/files/D0287A-2018%20-%20Communication%20on%20Termination%20of%20Repo%20Index%20Project.pdf .

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