OTTAWA - The Bank of Canada said on Wednesday it would establish a working group to consider the creation of a new risk-free Canadian dollar interest rate benchmark that is reliable and resilient to any market stress.

The creation of the benchmark, which would exist alongside the Canadian Dollar Offered Rate (CDOR), Canada's version of LIBOR, echoes efforts in other countries to develop new risk-free or nearly risk-free reference rates.

The central bank said the Canadian Alternative Reference Rate Working Group (CARR) would be sponsored by the Canadian Fixed-Income Forum and co-chaired by a senior representative of the bank and a member of the forum.

"To maximize transparency and achieve broad consensus on the working group's proposals, feedback will be sought from a wide range of stakeholders through targeted industry round tables and the publication of consultation papers," the bank said in a statement.

The group will also explore possible enhancements to the existing Canadian overnight risk-free rate, the Canadian Overnight Repo Rate Average (CORRA), to consider ways to broaden the volume of trades used to calculate the rate, the bank said.

CDOR is a rate at which banks will lend to corporate clients using bankers’ acceptances, a short-term credit instrument. It is calculated daily by Thomson Reuters based on rate submissions from banks.