The Looming End Of Libor – Fallback Protocols And Transition To Alternative Reference Rates

LIBOR will be discontinued by the end of 2021. Despite this, the volume of LIBOR pegged financial products which will only expire after the end of 2021 is very high. In order to minimize risk, counterparties to LIBOR-based financial products should take steps to transition to an alternative reference rate or to re-negotiate their financial products now.

Discontinuation of LIBOR: Replacement by Alternative Reference Rates

As of today, the London Interbank Offered Rate (LIBOR) is arguably the most important benchmark rate used for myriad loans, deposits, derivatives, debt securities and other investments denominated in USD, EUR, GBP, CHF, and JPY. Due to a history of manipulations of LIBOR, in November 2020, the UK's Financial Conduct Authority (FCA) and the ICE Benchmark Administration (IBA) published information on the discontinuation of most LIBOR rates as of the end of 2021.