The AFM and DNB therefore urge banks, insurers and pension funds in a letter to analyse the risks related to the transition and take appropriate action,
and to transition to relevant alternative benchmarks as soon as they become available. In their current form, crucial benchmarks such as EURIBOR, LIBOR and EONIA may not be compliant with the requirements of the EU benchmark directive, which will fully enter into force in 2022. The current benchmarks are based on interbank markets, which have seen a downward trend in terms of traded volume in the past few years. As a result, there is an insufficient number of parties that is able to effectively contribute to them.
The new directive affects existing contracts as well as contracts based on crucial benchmarks concluded from 1 January 2022 onwards. If a benchmark is no longer available for an existing contract, an appropriate alternative benchmark must be ready for use. That is why the users of these benchmarks must ensure that they make the transition to alternative benchmarks in time.