A key driver for the transition to risk-free rates (RFRs) is that the credibility of IBORs has declined. As the volume of IBOR transactions has decreased, the number of transactions has been too low to serve as an unbiased basis for the calculation of IBORs. Consequently, IBORs have been based on estimates rather than on actual transactions – a situation which has given rise to concerns about objectivity. 

What the risk-free rates all have in common is that they are based on actual transactions and are retrospective. In addition, they lack maturities, so they have no credit risk. Taken together, these characteristics make RFRs more credible than IBORs.  

Swedbank, as a major full-service bank, currently uses IBORs in our lending, savings, investment and placement products as well as in our internal processes. The bank will adapt to the new reference rates in relevant financial products and parts of our operations, and will facilitate the use of risk-free rates when they are made available.