The Bank of Canada today published the Canadian Alternative Reference Rate Working Group (CARR) principles for enhancements to fallback language for cash products. These principles will help ensure that new financial contracts for non-derivative products are effective in the event that existing referenced benchmarks disappear.

The principles include guidelines related to the application of spread and term adjustments if required, and promote standardization of fallback language across products. Adoption of these principles is voluntary. However, it is strongly encouraged that more robust fallback language be developed and implemented for new financial products.

These principles will drive CARR`s development of recommended fallback language for use in new non-derivative contracts. This draft fallback language is expected to be published in the first half of 2019.

Information on CARR’s activities are available on the Canadian Alternative Reference Rate Working Group webpage.

For further information, please contact:

Market inquiries:
Harri Vikstedt
Senior Director
Financial Markets Department
Bank of Canada
613-782-7768
CARR-WG@bankofcanada.ca

Media:
Media Relations
Bank of Canada
613-782-8782