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.
Selection of Nowa as an alternative reference rate
The main objective of the first part of the group’s work was to recommend an alternative reference rate for the Norwegian krone. The working group published its recommendation of a reformed version of Nowa (pdf) (Norwegian Overnight Weighted Average) as the alternative reference rate at the end of September 2019.
Norges Bank took over as administrator of Nowa on 1 January 2020 and has published new principles for calculating and publishing Nowa.
Use of Nowa as an alternative reference rate
The second phase of the group’s work on alternative reference rates is focusing on how to transition to using Nowa as an alternative reference rate. The working group has invited other market participants into the work and divided the work into two sub-groups. The following sub-groups were established in December 2019:
(1) Market standards and fallback solutions
(2) Establishing an OIS (Overnight Index Swap) market in NOK
The sub-groups aim to publish an official report with recommendations by the end of 2020.
The original working group continues to be the main group for coordinating further work. The sub-groups will regularly update the main working group on their work. The mandates and lists of participants for the main working group and the two sub-groups are available here.