The Financial Stability Board (FSB) today published a global transition roadmap for LIBOR. The roadmap sets out a timetable of actions for financial and non-financial sector firms to take in order to ensure a smooth LIBOR transition by end-2021.
The Financial Stability Board (FSB) today published a global transition roadmap for LIBOR.
The roadmap sets out a timetable of actions for financial and
non-financial sector firms to take in order to ensure a smooth LIBOR
transition by end-2021.
In July the FSB reaffirmed that
financial and non-financial sector firms across all jurisdictions
should continue their efforts to make wider use of risk-free rates in
order to reduce reliance on IBORs where appropriate and in particular to
remove remaining dependencies on LIBOR by the end of 2021.
The LIBOR benchmarks are not guaranteed to continue to be available
after end-2021 and therefore preparations should be underway to reduce
reliance on these rates well ahead of that point. Use of LIBOR in the
five LIBOR currencies (USD, GBP, EUR, JPY and CHF) is widespread
internationally. Transition away from LIBOR by end-2021 requires
significant commitment and sustained effort from both financial and
non-financial institutions across many LIBOR and non-LIBOR
jurisdictions.
This Global Transition Roadmap for LIBOR
is intended to inform those with exposure to LIBOR benchmarks of some
of the steps they should be taking now and over the remaining period to
end-2021 to successfully mitigate these risks. These are considered
prudent steps to take to ensure an orderly transition by end-2021 and
are intended to supplement existing timelines/milestones from industry
working groups and regulators. Among the steps in the Roadmap:
- Firms should have already, identified and assessed all existing LIBOR exposures and agreed on a project plan to transition in advance of end-2021.
- By the end of 2020, firms should be in a position to offer non-LIBOR linked loans to their customers.
- By mid-2021, firms should have established
formalised plans to amend legacy contracts where this can be done and
have implemented the necessary system and process changes to enable
transition to robust alternative rates.
- By end-2021, firms should be prepared for LIBOR to cease.
Notes to editors
The FSB set out in 2014 a series of recommendations for strengthening
key interbank offered rates (IBORs) in the unsecured lending markets,
and for promoting the development and adoption of alternative nearly
risk-free reference rates, where appropriate. The FSB and member
authorities, through the FSB Official Sector Steering Group (OSSG)
chaired by Andrew Bailey (Governor, Bank of England) and John C.
Williams (President and CEO, Federal Reserve Bank of New York), are
working to implement and monitor these recommendations. The FSB
published its most recent annual progress report in December 2019 on implementation of the recommendations.
In July 2020, the FSB and Basel Committee on Banking Supervision published a report on
supervisory issues associated with benchmark transition, setting out
recommendations for authorities to support financial institutions’ and
their clients’ progress in transitioning away from LIBOR.
The FSB coordinates at the international level the work of national
financial authorities and international standard-setting bodies and
develops and promotes the implementation of effective regulatory,
supervisory, and other financial sector policies in the interest of
financial stability. It brings together national authorities responsible
for financial stability in 24 countries and jurisdictions,
international financial institutions, sector-specific international
groupings of regulators and supervisors, and committees of central bank
experts. The FSB also conducts outreach with approximately 70 other
jurisdictions through its six Regional Consultative Groups.
Global transition roadmap for LIBOR
© FSB - Financial Stability Board
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