Reference rates (also known as interest rate benchmarks or benchmark rates) are calculated by independent bodies to reflect market interest rates. Financial institutions use these benchmarks to set interest rates for their own products, including loans or mortgages.

In recent years, the accuracy, robustness and integrity of benchmarks like EURIBOR, EONIA and LIBOR have come under fire. It became obvious that a more objective and clearer set of rules were required for inputting data into these benchmarks, for calculating them and for making changes to them. 

Given this situation, the European Commission drafted a regulation in 2016 – the EU Benchmark Regulation (BMR) – which defined the new conditions that benchmark rates have to meet to enhance their accuracy, reliability and transparency.

Certain benchmarks in their old form do not comply with the BMR and will have to be reformed. Others will be discontinued and may or may not be replaced by alternative benchmarks. 

The latest step in this large-scale reform was the introduction of the euro short-term rate (€STR) in October 2019.

The BMR may have an impact on your products or contracts. KBC Brussels is closely monitoring developments and will advise you of any changes that will affect you. If anything in your contract(s) has to be changed, we’ll contact you about it in good time.