Two of finances most powerful regulators yesterday told the sector to speed up its move away from contracts linked to the scandal-hit Libor benchmark.
Read more: Bank of England calls last orders on Libor
New York Federal Reserve president John Williams said financial institutions “must not wait” to stop using the lending benchmark in a speech in New York yesterday.
At the same event, the chief executive of the UKs Financial Conduct Authority (FCA) Andrew Bailey said the financial sector should not rely on lawmakers to solve the issue of Libor-linked contracts.
Libor, short for London interbank offered rate, is a benchmark rate calculated from quotes by banks. Financial firms use it to price contracts, on anything from mortgages to interest rate swaps, worth over $300 trillion (£240 trillion).
Shortly after the financial crisis, Libor was the subject of one of the biggest financial scandals of recent times when a number of banks were found to have rigged it to secure cheap loans.
Outrage prompted UK regulators to call time on the benchmark. The FCA has given financial firms until 2021 to move away from Libor.
Williams yesterday said firms urgently needed to transition to other benchmark rates. “Every new US dollar Libor contract written digs a deeper hole that will be harder to climb out of,” he said.
FCA chief Bailey said financial institutions must “very carefully consider their fallback provisioRead More