Euro Libor Definition

What is the Euro Libor?

The Euro Libor is the Libor rate denominated in Euro.  The current Euro Libor rate is quoted based on the average of rates across sixteen European banks.  The Euro Libor represents the short-term lending rate that banks extend to each other on a daily basis.  This rate is set by a small group of wealthy London banks on a daily basis.  The main reason for the Euro Libor rate is for the continuity in swap contracts dating back to pre-Euro times.  Due to the large size of the participating banks, the Euro Libor rate is regarded as the benchmark for short-term interest rates.