FSB warns banks to press ahead with Libor transition

Financial and other firms have been warned by a global banking body that they should continue to ensure that their transition programmes enable them to transition to LIBOR alternatives before the end of 2021.

The Financial Stability Board (FSB)’s Official Sector Steering Group (OSSG) is monitoring the developments closely and recognises that some aspects of firms’ transition plans are likely to be temporarily disrupted or delayed, while others can continue.

However, it maintains its view that financial and non-financial sector firms across all jurisdictions should continue their efforts in making wider use of risk-free rates in order to reduce reliance on IBORs where appropriate. In particular, this means removing remaining dependencies on LIBOR by the end of 2021.

Relevant national working groups are co-ordinating changes to intermediate milestones in their benchmark transition programmes, where appropriate, to ensure global coordination. Financial and other firms should continue to ensure that their transition programmes enable them to transition to LIBOR alternatives before end-2021.

LIBOR transition is a priority for the G20. In its February 2020 communique, it asked the FSB to identify remaining challenges to benchmark transition by July 2020 and to explore ways to address them. The FSB will publish a report on these issues later this month.