What Is the Stockholm Interbank Offered Rate?

Stockholm Interbank Offered Rate (STIBOR) is the benchmark interest rate that banks in Sweden charge each other for overnight and other short-term loans.

STIBOR is the average of rates at which Swedish banks are willing to lend to one another. It covers six maturities: overnight, one week, one month, two months, three months, and six months.

The Swedish Financial Benchmark Facility has been responsible for the calculation and administration of STIBOR since April 20, 2020. It took over from the Swedish Bankers' Association.

Key Takeaways

  • STIBOR is a reference rate that shows the average of rates at which Swedish banks are willing to lend to one another without collateral.
  • The Swedish Financial Benchmark Facility is responsible for the calculation and administration of STIBOR.
  • Seven panel banks submit rates, which are then used to calculate the reference rate.
  • In March 2021, the Swedish Financial Benchmark Facility launched the public consultation phase of its review to bring more transparency to STIBOR.

Understanding STIBOR

STIBOR serves a function similar to the London Interbank Offered Rate (LIBOR) in the United Kingdom and United States. It is a reference rate that shows an average of interest rates that banks active in the Swedish money market are willing to lend to each other without collateral at different maturities.

Seven panel banks submit rates to calculate the reference rate. They are: Danske Bank, Nordea Bank, SEB, Handelsbanken, Swedbank, Länsförsäkringar Bank, and SBAB Bank.

Under current methodologies, if all seven panel banks submit rates, the highest and lowest rates are set aside. The middle five rates are then used to calculate the rate for the relevant maturity.

An oversight committee is responsible for the methodology, determination and dissemination of STIBOR. The committee's purpose is to ensure that STIBOR benchmarks are reliable and accurate.

STIBOR has a whistleblower system to report any irregularities. Though efforts will be made to keep the identities of whistleblowers confidential, as investigations get underway, it may be necessary to disclose a person's identity. Anonymous disclosures are not encouraged, as investigators may not be able to substantiate allegations without corroborating evidence.

The integrity of benchmark rates has been a concern since the 2012 LIBOR scandal. In March 2021, the Swedish Financial Benchmark Facility announced the public consultation phase of its review to bring more transparency to STIBOR and align the benchmark with international standards.