20 Nov FSB – Sets out progress on interest rate benchmark reform
November 20, 2020 – FSB issued a report setting out the progress made on reforms of interest rate benchmarks, including London inter-bank offered rate (LIBOR) Discussed timetable of actions to ensure smooth LIBOR transition to a new benchmark. Stated work for transitioning away from LIBOR needs to accelerate during early 2021.
Preparing for Transition
With only one year left, all market participants – financial, non-financial firms across the globe – must follow necessary steps to avoid disruption to contract performance. For benchmark transition to occur on time, market participants will need to cease the use of LIBOR as a benchmark in all-new activity across global markets as soon as possible.
New Benchmark Powers
LIBOR administrator, ICE Benchmark Administration (IBA) has consulted on the intention for Euro, Pound Sterling, Swiss Franc, Japanese Yen LIBOR panels to cease at end-2021. The onus of action is on firms, given extent of risks associated with failure to prepare for the transition, global, national financial regulators will closely monitor the level of progress.
Beyond LIBOR, benchmark transition remains a crucial step to increase the resilience of markets reliant on interest rate benchmarks, through reforms to existing benchmarks. November 24, 2020
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