As part of the interest rate benchmark changes, the Eurosystem has created the euro short-term rate ESTR and the compounded ESTR for standard tenors. In the financial and banking sectors, as well as in the economy at large, the ESTR is an important interest rate benchmark. Following best practices outlined in the Principles for Financial Benchmarks of the International Organization of Securities Commissions (IOSCO), the ESTR was designed and implemented.

The euro short-term rate, also known as the ESTR, is a measure reflecting the percentage change in a country's short-term interest rates. This can be either a rise or a fall depending on what is happening in that country. It is used to compare changes in interest rates between countries and has been used as an indicator for how well things are going in that country.

The €STR is the primary overnight interest rate benchmark for the euro area. It measures the average cost of unsecured overnight borrowing between banks and other financial institutions. Published by the European Central Bank, the benchmark is based entirely on actual market transactions. This methodology makes the rate more accurate and trustworthy than benchmarks based on estimates. Financial institutions use the €STR as a reference for a wide range of financial instruments and contracts. The benchmark also helps market participants understand short-term funding conditions and liquidity levels in the banking sector. Changes in the rate can signal shifts in economic activity or monetary policy expectations. Because of its importance in pricing and risk management, the €STR has become a central component of the eurozone’s financial framework and a key indicator for financial professionals.