The Reserve Bank of New Zealand – Te Pūtea Matua has signed the 'IBOR Fallbacks Protocol' published by the International Swaps and Derivatives Association (ISDA).
As a market participant, this is an important step for the Bank to support an effective and efficient transition away from LIBOR and other key interbank offer rates (IBORs) by the end of 2021.
ISDA recently released new documentation that will help ease the transition from IBORs to alternative risk-free rates.
The purpose of ISDA's Protocol and associated Supplement to the 2006 ISDA Definitions is to implement robust fall-back provisions for derivative contracts referencing IBORs – including LIBOR.
Christian Hawkesby Assistant Governor/GM Economics, Financial Markets and Banking said, "As the Kaitiaki (guardians) of New Zealand's financial system, adherence to the Protocol is a critical step in mitigating the risks associated with the transition away from LIBOR and other benchmarks."
"We reiterate the importance of the Protocol, welcome the leadership shown by those institutions that have signed already, and strongly encourage other New Zealand institutions to follow suit before the Protocol comes into effect on 25 January 2021."
