This blog was authored by Rory Scott, Candidate Attorney.
In recent years, financial markets globally have been implementing the reform of reference interest rates to Risk-free Reference Rates (RFRs). South Africa, following suit, is progressing towards replacing the Johannesburg Interbank Average Rate (JIBAR) with the preferred successor rate of the Market Practitioners Group’s (MPG), most
Economists and business leaders have welcomed the South African Reserve Bank’s (SARB) decision to cut the repo rate by a further 50 basis points (bps) to 3.75% on 21 May 2020. This has resulted in a reduction of the prime rate quoted by our commercial banks from 7.75 % to 7.25 %. This is the
The history of manipulation and scandals surrounding interbank offered rates (IBORs), for example LIBOR and JIBAR, has led to the shift toward Risk-Free Rates (RFRs), a shift which is primarily market led and remains uncertain.
The transition to RFR’s rests on the fact that rates such as LIBOR are forward-looking interest rates, calculated using estimates