ECB’s Holthausen urges market to ditch Eonia

Regulator sees risk in relying on fallbacks to effect switch to €STR – and calls on dealers to educate clients

A senior European regulator has urged the market to embrace the euro short-term rate, or €STR, after market participants abandoned the new benchmark in favour of the outgoing Eonia during Covid-19 volatility in March and April.

Volumes in €STR have started to recover – and should have received a shot in the arm when clearing houses started using the new rate to discount cleared euro interest rate swaps in July – but they remain lacklustre.

“I would have hoped for more activity at this point,”