Definition: Forward rate agreement (FRA)
European System of Accounts (ESA)
Contractual arrangement in which two parties, to protect themselves against interest rate changes, agree on an amount of interest to be paid, at a specified settlement date, on a notional amount of principal that is never exchanged. FRAs are settled by net cash payments in a similar way as interest rate swaps. The payments are related to the difference between the forward rate agreement rate and the prevailing market rate at the time of settlement (ESA 2010).
Contractual arrangement in which two parties, in order to protect themselves against interest rate changes, agree on an interest to be paid, at a settlement date, based on a notional amount of principal that is never exchanged. The payments are related to the difference between the agreement rate and the prevailing market rate at the time of settlement (ESA 1995).
Source:
Eurostat, "European System of National and Regional Accounts - ESA 2010", Luxembourg, 2013
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