Bank transaction upsets EONIA rate

A jump in Euro OverNight Index Average (EONIA) prices, a key overnight benchmark rate used by European banks to lend money to each other, was caused by the National Bank of Greece’s lending money to fellow Greek banks, a Bloomberg report suggested on Monday.

“These are low credit banks so they pay higher rates, and given the average volume of trading is very low at 5.6 billion euros [a day], you can see how it would have an effect on the price,” said DZ Bank analyst Rene Albrecht.

He said EONIA prices were likely to stabilize this week.

[Reuters]