RBA deputy sets out potential changes to interest rate benchmark

Possible reforms to the bank bill swap rate (BBSW) to ensure it remains trustworthy and reliable will need to be acted on to ensure it remains a "trusted, reliable and robust" benchmark, according to Guy Debelle, an assistant governor at the Reserve Bank of Australia.

Speaking in Sydney, Debelle said benchmarks such as BBSW were "a very critical part of the plumbing of the financial system".

There are some areas for improvement, he said. "There are quite a number of days where there is no turnover at all at the rate set," Debelle noted, suggesting banks were concerned they would be accused of influencing the rate should they trade within the window.

"The low turnover in the interbank market raises the risk that market participants may, at some point, be less willing to use BBSW as a benchmark [...] It is important there is ongoing confidence in it. Without that, we have a serious problem," he stressed.

Including trades from bond funds and superannuation funds, and extending the period in which transactions are used to calculate the rate are among the proposed changes.