While LIBOR transition is a major program, it was never based on an immovable date like “the year 2000” (Y2K). It now seems possible that transition may end up being simplified for USD legacy contracts, which would address major concerns. But even as the LIBOR transition continues to evolve, it will inevitably happen. In the word of New York Federal Reserve President John Williams, “Some say only two things in life are guaranteed: death and taxes. But I think there are three: death, taxes, and the end of LIBOR.”

Randal K. Quarles, the Federal Reserve’s Vice Chairman for Supervision, in his November 2020 testimony to the US Senate Committee on Banking, offered a preview into how the Federal Reserve might help the financial services industry address the issues of legacy contracts that use the London Interbank Offered Rate (LIBOR). If the solution described by Quarles can be created —a “mechanism” allowing existing LIBOR contracts to mature beyond 2021 without having to be renegotiated—then transition can be simplified; application of fallbacks can be limited, and existing loans can mature organically while new loans use new rates.