Industry needs consensus on new reference rate: ECB

Europe's financial industry must reach a broad-based consensus on a new benchmark interest rate after confidence in current gauges has been undermined by cases of manipulation and low liquidity, European Central Bank director Benoit Coeure said.

The ECB launched its own effort late last year to develop a new overnight reference interest rate by 2020 after industry players failed to come up with an alternative to existing benchmarks. The European Commission has fined several banks over a course of several years for manipulating benchmark rates.

“For the reform to be successful and conducted in a non-disruptive manner, it is essential that this working group reaches a broad-based consensus on alternative risk-free rates and on the best approaches for incorporating their use in financial contracts,” Coeure told the group asked to craft the new facility.