On March 15, 2018, the European Central Bank published a second consultation paper on a new unsecured overnight interest rate for euro transactions. This second consultation follows the ECB's announcement in September 2017 of its intention to develop the new benchmark and an initial consultation in November 2017 on its high level features. The new ECB rate will represent the euro unsecured money market in the very short tenor (i.e. overnight) and will be based entirely on transactions in euro that are reported by banks in accordance with the ECB's money market statistical reporting. It will complement existing benchmark rates produced by the private sector and serve as a backstop reference rate. The ECB proposes to produce the new rate by 2020.
The second consultation sets out a proposed definition of the underlying interest and scope of the benchmark, based on responses received to the first consultation. On the basis of the proposed definition of the rate's underlying interest, the second consultation considers the defined methodology of the new rate, along with the key operational and technical parameters. The consultation document also proposes contingency calculation rules in case certain representativeness thresholds are not met.
The ECB invites responses to the consultation, via a response template, by April 20, 2018.
The consultation is available at: http://www.ecb.europa.eu/paym/pdf/cons/euoir/consultation_details_201803.pdf and the response template-is available at: http://www.ecb.europa.eu/paym/pdf/cons/euoir/consultation_details_201803.pdf.
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