European Central Bank Published Good Practice Guidance on Preparation for Benchmark Rate Reforms
The European Central Bank has published a report on the results of its industry-wide assessment of Eurozone banks’ readiness for the benchmark interest rate reforms, which affect both EONIA and EURIBOR in the euro area. The purpose of the report is to share good practices that the ECB has identified in its horizontal assessment of the preparedness of Eurozone banks supervised under the Single Supervisory Mechanism. According to the ECB, banks need to improve their preparation for the reforms and escalate their implementation of risk mitigation measures. The ECB also noted that the majority of Eurozone banks had focused on the transition from EONIA to €STR, with less attention being paid to the reforms to EURIBOR, despite EURIBOR being used more often. Good practices that the ECB has identified and encourages banks to consider relate to governance structure, risk identification approaches, action plans and documentation. Banks should also assess any additional measures they should take based on the nature of their exposures.