FSB Statement Welcoming Smooth Transition Away from LIBOR
Following years of preparation, the end of 2021 marked a major milestone in the transition away from LIBOR.
The FSB welcomes the smooth transition to robust alternative rates across global markets, primarily overnight risk-free or nearly risk-free rates (RFRs). The absence of any significant market disruptions is a testament to the magnitude of market participants’ efforts and the level of attention from the regulators and industry bodies to support the transition to RFRs.
The statement notes that all GBP, EUR, CHF, and JPY LIBOR panels, as well as the 1-week and 2-month USD LIBOR settings, ceased as of end-2021. While key panel-based USD LIBOR settings will continue until end-June 2023, this is intended to support the run-off of a substantial portion of legacy contracts.
Given the significant use of USD LIBOR globally, the FSB emphasises that firms must have plans in place to ensure their preparedness for the cessation of the USD LIBOR panel.
More generally, to ensure financial stability, it is important that market participants transition from LIBOR and other IBORs that are set to be discontinued.
The FSB’s Official Sector Steering Group (OSSG) will continue to serve as a forum in 2022 and 2023 for cooperation amongst authorities that have leading roles in interest rate benchmark reforms and transition preparedness.