American Financial Services Association

Federal Banking Agencies Urge Banks to Transition Away From LIBOR

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Federal Banking Agencies Urge Banks to Transition Away From LIBOR

This week, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued a statement encouraging banks to transition away from the U.S. dollar (USD) London Interbank Offered Rate (LIBOR) in a timely manner. LIBOR is used globally as a short-term interest rate benchmark for various credit products The joint agencies’ statement followed the Intercontinental Exchange’s announcement of their intention to cease the publication of the one week and two month USD LIBOR settings on December 31, 2021 and the overnight, one, three, six, and 12 month USD LIBOR settings on June 30, 2023.

AFSA previously commented on the Consumer Financial Protection Bureau’s (CFPB) rulemaking to facilitate a smooth transition away from LIBOR to avoid disruptions in the credit market. The CFPB’s proposed rule will provide financial institutions flexibility in selecting replacement indices while creating disclosure requirements to help consumers understand changes in credit products.

December 2nd, 2020 by