The Dutch Central Bank (De Nederlandsche Bank, DNB) and the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) recently announced that they will be requesting financial institutions to provide information on the transition to alternative interest rate benchmarks. The global transition from Inter Bank Offered Rates to Risk Free Rates will end on 1 January 2022, which is why the AFM and DNB are monitoring the progress of the transition.
The request is intended to provide the AFM and DNB with a picture of the status of the transition at financial institutions. Starting on 1 July 2020, a selection of insurers, pension funds, investment institutions and banks (which are not under the direct supervision of the European Central Bank) will be required to participate in a semi-annual questionnaire. All institutions involved have been made aware of this. DNB and the AFM note that although 2022 still sounds a long way off, it is important that financial institutions and customers are already switching to new benchmarks and introducing fallback options for current contracts. A disordered and/or incomplete transition could lead to prudential risks.