INTEREST RATE BENCHMARK REFORMS IN EURO ZONE AND UNITED STATES

Vesna Martin

Ekonomske ideje i praksa, 2022, issue 44, 1-15

Abstract: The aim of this paper is to analyze the process of implementing reforms in the bank lending market and its consequences. During the global financial crisis of 2007/2008, there was a decrease in confidence and thus a decline in the turnover in the bank lending market. Consequently, the benchmark interest rates did not present the conditions for lending funds between banks, but were a reflection of manipulative actions by participants. This reduced liquidity in the bank lending market, as well as the unreliability of the methods of calculating benchmark interest rates, became a source of financial vulnerability and endangering the stability and security of operations for all participants in the financial market. For this reason, in 2012, the process of reforming benchmark interest rates at the global level began, which represents the most significant change in the global financial market in recent history. The reforms were implemented with the aim of increasing transparency in the calculation of benchmark interest rates, which increases their reliability of calculation and prevents the possibility of manipulation while protecting investors and users of all financial services. Of great importance is the analysis of the consequences of benchmark reforms and the impact on all participants in the financial market.

Keywords: benchmark interest rates; interbank lending market; central bank; credit activity (search for similar items in EconPapers)
JEL-codes: D47 E43 E58 G21 (search for similar items in EconPapers)
Date: 2022
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