South African Reserve Bank deputy governor Rashad Cassim announced the Johannesburg Inter-Bank Average Rate will cease to operate in December 2026 and will be replaced by the South African Overnight Index Average (Zaronia).
This concludes work between the Reserve Bank and the Market Practitioners Group (MPG) to replace the Jibar with the Zaronia.
Speaking at an event in Johannesburg on Wednesday morning, Cassim said Jibar will be discontinued from December 31 2026. He said the process to phase out Jibar included stakeholders from banking and other sectors who brought a wealth of expertise to the process during the course of nearly a decade.
“It has been eight years to reach this point, starting with the Reserve Bank consultation paper on alternative interest rate benchmarks. As someone who has been chairing the market practitioners’ group, I was overwhelmed with the expertise in the country, with the banks, with the non-banks in the financial sector.”
The transition represents a change in the backward-looking, risk-free rate based on actual overnight wholesale funding transactions. The Reserve Bank noted key weaknesses in the Jibar system that needed to be addressed.
Cassim said as South Africa approached the Jibar cessation date, the central bank aimed to stop increasing the stock of contracts that will need to be transitioned off Jibar in a gradual transition process.
“We are encouraging market participants to use Zaronia instead of Jibar in contracts, but around the second quarter of next year, we plan, along with the Financial Sector Conduct Authority (FSCA) to issue regulations limiting new Jibar exposures.”
He said he engaged with MPG members on which Jibar transition risks should be noted and avoided, adding he was told the challenge was posed by legacy contracts that cannot easily be changed before Jibar is discontinued.
“We are aware the pre-cessation announcement will trigger certain contractual provisions for the calculation and future application of fall backs. We expect credit adjustment spread calculations to crystallise today. However, the spreads will not be applied until after December 31 2026 as the Jibar rates are expected to remain representative until that point.”
He said the Reserve Bank and the FSCA have proposed amendments to the Financial Sector Regulation Act which will give the bank powers to designate replacement benchmarks for discontinued rates and determine adjustment spreads for moving contracts from one benchmark to another.
Business Times
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