Libor's Uncertain Succession Triggers $350 Trillion Headache
- FCA’s Bailey says Libor isn’t sustainable in its current form
- Benchmark replacement is part of ongoing global reform effort
FCA Says Libor Is Ending in 2021
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U.K. regulators’ decision to abandon the Libor benchmark by the end of 2021 is sowing confusion in the market as the industry races to replace the scandal-plagued rate underpinning more than $350 trillion of financial products.
Bankers and traders for decades have built Libor -- which stands for London interbank offered rate -- into financial contracts of all types: mortgages on homes and office towers, corporate loans, student debt and tens of thousands of interest-rate derivatives contracts. Now the finance world will need to find another reference rate for new transactions. Existing contracts will need to be renegotiated. And computer systems coded to the Libor rate will need an overhaul.