The Central Bank of Egypt (CBE) announced on Thursday the launching of the Cairo Overnight Index Average benchmark (CONIA), which was developed by the Egyptian Money Market Contact Group.
The Contact Group was set-up in March 2018 to promote safe and efficient local currency money markets.
CONIA reflects rates on interbank transactions that are virtually risk free because of their very short tenors. The benchmark will be published starting October 2019.
"The introduction of the risk free interest rate benchmark will lay the foundation for the enhancement and the improved efficiency of the market. This move is in line with the international movement towards developing risk free rates as the -IBOR benchmarks are being phased out across various markets" according to the statement.
The new benchmark, CONIA, brings together the CBE, select commercial banks, and the European Bank for Reconstruction and Development.
The transparency and robustness of the benchmark will support the development of a broader set of products for financial sector participants, enhance the monetary policy transmission mechanism and improve the resilience of the capital markets and the overall economy.
"Following the introduction of CONIA, the group will now focus on developing instruments that will use CONIA. It will also work to enhance domestic money markets and to ensure that CONIA continues to provide an accurate reflection of underlying market conditions" CBE's statement added.