Fallback provisions in new contracts for euro-denominated cash products
The working group on euro risk-free rates, for which the European Central Bank (ECB) provides the secretariat, has published the paper “Guiding principles for fallback provisions in new contracts for euro-denominated cash products”. The paper offers an overview of the legal frameworks and market practices applicable to cash products, such as mortgages, loans and bonds, that reference EURIBOR and EONIA, with a specific focus on fallback clauses. It is important that market participants prepare for the transition to risk-free rates and the paper proposes a set of guiding principles promoting the use of effective fallback provisions in new contracts for euro-denominated cash products. In the course of 2019, the working group intends to recommend more detailed fallback language to be used in legacy and new euro-denominated contracts.
- Working group highlights importance of market participants preparing for transition to risk-free rates
- Paper proposes guiding principles promoting use of effective fallback provisions in new contracts for euro-denominated cash products
The working group on euro risk-free rates is an industry-led group established in 2018 by the ECB, the Financial Services and Markets Authority, the European Securities and Markets Authority, and the European Commission. Its main tasks are to identify and to recommend alternative risk-free rates and transition paths. On 13 September 2018 the working group recommended ESTER as the new euro risk-free rate. ESTER reflects the wholesale euro unsecured overnight borrowing costs of euro area banks and will be published by the ECB as of October 2019 at the latest.
For media queries, please contact William Lelieveldt, tel.: +49 69 1344 7316
Reproduction is permitted provided that the source is acknowledged.
Latest News from
Making roads safer – EU agrees on reforms to strengthen road infrastructure management22/02/2019 16:38:00
Representatives of the Romanian presidency of the Council have reached a provisional agreement with the European Parliament on a proposal to strengthen road infrastructure management to reduce road fatalities and serious injuries.
Commissioner Hogan on CAP budget: decision lies now with co-legislators22/02/2019 15:25:00
EESC wants better protection of farmers in both FTAs and the food supply chain – calls for climate change to be factored into CAP policies
State aid: EC opens in-depth investigation into British Capacity Market scheme22/02/2019 14:38:00
The EC has opened an in-depth investigation to determine whether the British Capacity Market scheme to safeguard security of electricity supply is in line with EU State aid rules. This follows the EU General Court's annulment of a previous Commission decision approving the scheme.
Public consultation: phthalates used in food contact materials22/02/2019 13:25:00
FSA is launching a public consultation on the draft update of its 2005 risk assessments of five phthalates which are authorised for use in plastic food contact materials.
Fighting against populism is everybody's business, says EESC Diversity Europe Group22/02/2019 10:38:00
Economic progress and social stability are two key elements in the fight against Euroscepticism but they alone are not enough: civil society needs to get involved!
EU budget for 2021-2027: Commission welcomes provisional agreement on the future European Defence Fund22/02/2019 09:25:00
The EU institutions have reached a partial political agreement on the European Defence Fund, subject to formal approval by the European Parliament and Council, which will foster an innovative and competitive defence industrial base and contribute to the EU's strategic autonomy.
Joint statement on behalf of President Juncker and Prime Minister May21/02/2019 16:37:00
President Juncker and PM May met on Wednesday to take stock of their efforts to deliver the UK's orderly withdrawal from the EU, in line with the process launched by them on 7 February.
New EASO Practical Guide on the best interests of the child in asylum procedures21/02/2019 15:25:00
The aim of this practical guide is to help to identify & highlight the key milestones for the implementation of the best interests of the child.
EU measures in support of generic pharmaceuticals producers21/02/2019 14:43:00
The EU is adopting new rules which should boost the competitiveness of EU producers of generic medicines and biosimilar products.