ECB Amends Guideline on Euro Short-Term Rate
ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265. The tasks and responsibilities of ECB provided for in Guideline 2019/1265 are being updated with respect to the calculation and publication of compounded rates. The framework to consult stakeholders, which is provided for in Article 14 of the Guideline 2019/1265, is also being updated to enhance clarity. The amended guideline shall take effect on the day of its notification to the national central banks of the member states whose currency is EUR. The national central banks shall comply with the amended guideline at the latest from April 15, 2021.
The Benchmarks Regulation (2016/1011) necessitates the adoption of robust fallback provisions in a large number of financial contracts and instruments. In the absence of such fallback provisions, the possible discontinuation in the future of a critical benchmark such as EURIBOR, may have serious repercussions for the functioning of markets and, thus, for the implementation of monetary policy. Overnight rates compounded in arrears are one viable fallback option being recommended by FSB and market participants support the introduction of such rates. Thus, the publication of compounded rates based on historical €STR values by ECB can contribute to mitigating systemic risk in the scenarios of benchmark discontinuation, while promoting a wider use of the €STR and fostering consistency across major currency areas in the fallback options available to market participants.
Related Links
Keywords: Europe, EU, Banking, Securities, €STR, Interest Rate Benchmark, Benchmarks Regulation, Guideline 2019/1265, Fallback Provisions, EURIBOR, Compounded Rates, Guideline 2021/565, ECB
Previous Article
EBA Consults on Standards Related to FRTB-SANext Article
ESAs Publish Report on Activities of Joint CommitteeRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
