Working group on alternative reference rates (ARR)
A working group on alternative Norwegian krone reference rates was established by Norges Bank, in consultation with the financial industry, in early 2018.
The working group comprises representatives of Norwegian banks and branches of foreign banks with thorough knowledge of the Norwegian interest rate market and the use of Norwegian reference rates.
The first part of the group’s work has focused on recommending a reference rate for the Norwegian krone. The working group published its recommendation of a reformed version of Nowa as the alternative reference rate at the end of September 2019. Nowa stands for Norwegian overnight weighted average and is the only overnight NOK rate. The rate is to be reformed when Norges Bank becomes the administrator on 1 January 2020, but is likely to be very similar to today’s Nowa.
Invitations to sub-groups
The work on alternative reference rates is now moving into the next phase and will focus on how to transition to using Nowa as an alternative reference rate. In this part, there will be a need to invite more market participants into the work. A broad range of market participants, end-users of reference rates and public supervisors will ensure that different interests are safeguarded.
For more information see:
Invitation to join sub-groups working on an alternative reference rate for the Norwegian krone (pdf)
Market participants wishing to join one or more of the sub-groups are requested to contact the ARR secretariat by 5 December 2019 at the following email address: email@example.com. The application should include background information and relevant experience. The working group will put together the subgroups after an overall assessment of the number of participants and the desired composition of the groups.
Recommendation for an alternative reference rate in NOK
The ARR working group recommends a reformed version of Nowa as an alternative reference rate for the Norwegian krone. The rate will be very similar to today’s Nowa, but will be reformed when Norges Bank becomes the administrator for Nowa as from 1 January 2020.