South Africa postponed the retirement of its Jibar interest rate benchmark by five months to May 31, 2027, because necessary legislation remains unfinished, the South African Reserve Bank said.
The decision replaces the Dec. 31 deadline announced last year. The Bank for International Settlements published the central bank's remarks on Nov. 9 under the title “Opening remarks - 2026 Market Practitioners Group Conference”.
The central bank said the delay addresses contracts that cannot move automatically to a replacement rate or be amended before Jibar ends. Proposed amendments to the Financial Sector Regulation Act would allow authorities to designate replacement benchmarks, but still require parliamentary approval and presidential assent. The timing remains uncertain, the central bank said.
Ending Jibar without those legal arrangements could disrupt markets, the central bank said. Major clearing houses also need to coordinate the conversion of outstanding derivatives with the retirement date. Different transition dates could create risks involving pricing, protection against losses and day-to-day operations.
The central bank said the five-month delay would not create major new transition costs or reverse its decision to discontinue Jibar. The extra time would allow firms to finish changes to systems, operations and contracts while legislative work continues. It will support that work alongside National Treasury and the Financial Sector Conduct Authority.
The replacement, the South African Rand Overnight Index Average, or ZARONIA, uses transactions involving overnight wholesale deposits to calculate interest rates. The central bank said it was working well, with a small, stable gap to the policy rate. The postponement did not reflect concerns about the new benchmark.
Global derivatives exposures linked to ZARONIA exceeded 18.5 trillion rand as of September, while Jibar-linked exposures still exceeded 98 trillion rand, the central bank said. It called for firms to use the additional months to reduce remaining Jibar exposures, complete system changes and communicate with clients and counterparties.
The central bank said reform began in 2018 and involves a benchmark used in loans, bonds, derivatives and other financial contracts worth trillions of rand. The Libor scandal demonstrated the weaknesses of rates based on quotes from a small group of banks.
The central bank also said it wanted to end the Prime Lending Rate, which sits 350 basis points, or 3.5 percentage points, above its policy rate. Banks already have freedom to vary loan prices relative to Prime. Removing the benchmark would simplify pricing and make it more transparent, the central bank said, while lessons from Jibar would inform consultation and deadlines.
