On 2 July 2020, DNB published a newsletter regarding the change in interest rate benchmarks. The global transition from Inter Bank Offered Rates (IBORs) to Risk Free Rates (RFRs) will end on January 1, 2022. The reasons for this transition are the manipulation of various benchmarks and the reduced liquidity of some underlying unsecured markets.
21 Sep 2020
Although 2022 still sounds a long way off, it is important that financial institutions and customers are already switching to new benchmarks and introducing fallback options for current contracts. A disordered and / or incomplete transition can, among other things, create prudential risks.
This article was originally published in the August edition of REGWATCH. Read the full edition covering the following jurisdictions:
- European Union
- Hong Kong
- United Kingdom