Mon. Mar 27th, 2023

The European Commission launched a consultation, today, on the possible designation of a statutory replacement rate for the Swiss franc LIBOR benchmark (CHF LIBOR) in mortgage credit agreements.

Benchmarks, such as CHF LIBOR, are an integral part of financial markets: these indices are used to value financial instruments and contracts (including household mortgages) or to measure the performance of a fund. investment.

The Commission recently proposed changes to EU rules on financial benchmarks, which empower it to designate a replacement benchmark when an index needs to be phased out. The aim is to avoid any disruption to the economy or damage to the financial stability of the EU.

As the LIBOR CHF benchmark will cease to be published in December 2021, the Commission is currently consulting with market participants to assess whether there is a need to designate a successor to LIBOR CHF in retail mortgages and in small business loans.

The aim is to collect the views of a wide range of market players, in particular consumers and consumer associations, on the appropriate replacement rate for CHF LIBOR.

Mairead McGuinness, EU Commissioner for Financial Services, Financial Stability, and Capital Markets Union, said: “The European Union was the first jurisdiction in the world to pass legislation to support the end of LIBOR in cases where the market cannot be left alone to renegotiate contracts. By contributing to this consultation, you can have your say in how individuals and small businesses should be supported in order to ensure the continuity of contracts”. The consultation will last eight weeks.

Background: Ensuring the integrity of securities markets

The consultation document “Targeted consultation on the designation of a statutory replacement rate for CHF LIBOR” is available online and you can submit your comments here.

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