|
|
The working group on euro risk-free rates 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.