The Riksbank to investigate year-end effect in SWESTR

The Central Bank of Sweden, Riksbank, has published a press statement to announce a survey as regards the use of the Swedish krona Short Term Rate (SWESTR). The SWESTR is a transaction-based reference rate that is calculated and published by the bank on a daily basis. The SWESTR is typically subject to the so-called year-end effect, which refers to a temporary decrease in the value of the SWESTR on the last business day of the year. The reason behind this decline is that many banks, whose transactions contribute to the calculation of the SWESTR, tend to offer significantly lower overnight deposit rates to their customers during this period for fee and tax purposes.
To gain a better understanding of the impact of the year-end effect on the usability of the SWESTR as a reference rate and to explore potential modifications to promote the use of the SWESTR in financial contracts, the Riksbank has initiated a survey, in which Riksbanks seeks responses to various questions, including suggestions for alternative designs of the SWESTR that could mitigate or eliminate the consequences of the year-end effect. The insights gathered from the survey will be crucial for the Riksbank’s ongoing efforts to promote the adoption of the SWESTR.
A compiled version of the survey responses will be made available on the Riksbank’s website. Furthermore, the results will be discussed at the forthcoming Forum for Reference Rates and the Advisory Group for the SWESTR. The Riksbank is now inviting relevant market participants and potential users of the SWESTR to participate in the survey. Members of the above noted forum and advisory group will receive an email containing a survey link, while others interested in participating can request the link by sending an email to swestr@riksbank.se.