Review of the Benchmark Regulation

06-10-2020

The European Commission's proposal to amend the existing Benchmark Regulation (BMR) aims to address the expected cessation of the widely used LIBOR critical benchmark, as the BMR does not provide mechanisms to manage the consequences of the cessation of such critical benchmarks. The BMR would be amended also to ensure that European Union banks and companies can continue using hedging tools against the volatility of currencies that are not freely convertible into their base currency after the expiry of the transitional period at the end of 2021. The initiative is part of measures contributing to a capital markets union and an economy that works for people. The initial appraisal – which provides an analysis of the strengths and weaknesses of the European Commission's impact assessment (IA) accompanying the proposal – finds that the IA is underpinned by sound and recent data and extensive stakeholder consultations. The problem definition, objectives and policy options are clearly linked.

The European Commission's proposal to amend the existing Benchmark Regulation (BMR) aims to address the expected cessation of the widely used LIBOR critical benchmark, as the BMR does not provide mechanisms to manage the consequences of the cessation of such critical benchmarks. The BMR would be amended also to ensure that European Union banks and companies can continue using hedging tools against the volatility of currencies that are not freely convertible into their base currency after the expiry of the transitional period at the end of 2021. The initiative is part of measures contributing to a capital markets union and an economy that works for people. The initial appraisal – which provides an analysis of the strengths and weaknesses of the European Commission's impact assessment (IA) accompanying the proposal – finds that the IA is underpinned by sound and recent data and extensive stakeholder consultations. The problem definition, objectives and policy options are clearly linked.