In our earlier article on interbank offered rates published in February 2021 we wrote briefly on the Riksbank starting a test period to calculate and publish SWESTR (Swedish krona Short Term Rate), a transaction-based reference rate calculated by the Riksbank on the basis of transactions executed on the money market from one banking day to the next in Swedish kronor. The commencement of the test period for SWESTR was a part of the global reform of reference rates, wherein interbank offered rates are aimed to be replaced by alternative reference rates. During the test period SWESTR was not to be used in financial contracts. The test period will now end following 1 September 2021, and from 2 September 2021 onwards SWESTR can be used as a reference rate in financial contracts.
The Riksbank has announced that market participants should as soon as possible stop using STIBOR at its shortest maturity and instead use SWESTR. Further, the Riksbank has stated that it will be active in supporting a change wherein STIBOR would cease for all maturities. However, the Riksbank recognises that such a change must be done as a multi-year development project.
From 1 October 2021 onwards the Riksbank will start publishing also compounded average rates for SWESTR. Average rates can be used as fallbacks for interbank offered rates meaning that in case STIBOR ceases to be published or becomes unavailable during the contract term, compounded average rates for SWESTR may form the basis for an alternative interest rate.
It should however be noted that the publication and availability of SWESTR does not automatically mean that STIBOR would cease to be published and no such decisions have been made.