THE BIG SHIFT: PREPARING FOR A WORLD WITHOUT LIBOR

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18 March 2020

LIBOR (London Inter Bank Offer Rate), the interest rate at which banks

lend money to one another for short term loans, is a globally accepted

benchmark rate used to develop and offer wide range of financial products.

Post considerable uncertainties in LIBOR supervision and administration,

UK’s FCA (Financial Conduct Authority) took the supervision from BBA

(British Bankers Association) and delegated the administration responsibility

to IBA (ICE Benchmark Administration).

The estimated size of the LIBOR linked products across the globe is $350

trillion. With FCA’s announcement stating that LIBOR will see its end by

2021, and suggesting all the LIBOR users to opt for other risk free rates, now

the biggest challenge in front of the financial institutions is to transition

from LIBOR to other risk free rates. The shift away from LIBOR is going to

have a far-reaching impact on stakeholders across the financial services

industry.

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