Work on a new benchmark for the Euro Interbank Offered Rate needs to be done by 2020, according to the EU markets regulator.
Steven Maijoor, chair of the European Securities and Markets Authority, told a group developing a new benchmark to conclude their tasks by the end of 2019, City A.M. reported. Confidence in EURIBOR, which underpins large amounts of derivatives and mortgages, was knocked amid allegations of rate-rigging by banks.
Maijoor said deciding on a new rate is a "real financial stability concern," but that it should be spearheaded by the private sector given its use in commercial contracts. One issue to work out is that of legacy contracts, which may expire after the benchmarks themselves have ceased to exist.
The prevalence of consumer mortgages indexed to EURIBOR could also prompt a public backlash if a new benchmark significantly hits repayments, Maijoor said.
EURIBOR represents the interest rate at which banks are willing to lend to each other.
