EU Recommendations on Financial Accounting Implications of Transition to €STR

The European Central Bank has published a report by the working group on euro risk-free rates on the financial accounting implications of the transition from EONIA to €STR and the introduction of €STR-based fallbacks for EURIBOR. EONIA will be phased out in favor of the Euro short-term rate (or “€STR”), which began to be published on October 2, 2019. EONIA will cease to be published entirely on January 3, 2022 and in the meantime the methodology for calculating EONIA has been redefined as €STR plus a fixed spread. The methodology for calculating EURIBOR has also been revised to be Benchmark Regulation-compliant and will be based on a €STR structure, to be implemented by the end of 2019. The report sets out recommendations for those that prepare financial statements and the International Accounting Standards Board. The report focuses on the implications for the International Financial Reporting Standards and International Accounting Standards, which are predominantly used in Europe. Generally accepted accounting standards are out of scope of the report. The report primarily focuses on the implications of the EU Benchmark Regulation for hedge accounting purposes, but also considers non-hedge accounting issues.

View the report.

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