From a bank’s perspective, the most critical period in the lifecycle of small enterprises is the little time window between the unit operating smoothly and turning sick. The Framework provides for a structured mechanism, which could be triggered either by the banker or by the entrepreneur when first signs of stress appear.
Once ISDA has finalised the fall-back provisions, regulators expect users of benchmarks to adopt them. In Australia, we have taken a different path. The credit-based benchmark BBSW (the Bank Bill Swap Rate) has been strengthened and coexists alongside the cash rate, which is the risk-free rate for the Australian dollar.