February 26, 2018 / 10:33 AM / 7 months ago

Industry needs consensus on new reference rate: ECB's Coeure

FRANKFURT (Reuters) - 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.

FILE PHOTO: Benoit Coeure, board member of the European Central Bank (ECB), is photographed during an interview with Reuters journalists at the ECB headquarters in Frankfurt, Germany, May 17, 2017. REUTERS/Kai Pfaffenbach/File Photo

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.

Reporting by Balazs Koranyi; Editing by Peter Graff

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