FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition. As per the statement, the FSB Official Sector Steering Group (OSSG) recognizes that some aspects of the transition plans of firms are likely to be temporarily disrupted or delayed, while others can continue. LIBOR transition is a G20 priority and the G20, in its February 2020 communique, asked FSB to identify remaining challenges to benchmark transition by July 2020 and to explore ways to address them. FSB will publish a report on these issues later this month.
FSB is of the view that financial and non-financial sector firms across all jurisdictions should continue their efforts in making wider use of risk-free rates to reduce reliance on interbank offered rates (IBORs), where appropriate, and to remove the remaining dependencies on LIBOR by the end of 2021. LIBOR transition remains an essential task that will strengthen the global financial system. The COVID-19 crisis highlighted that the underlying markets LIBOR seeks to measure are no longer sufficiently active. Moreover, these markets are not the main markets that banks rely on for funding. The increase in the most widely used LIBOR rates in March put upward pressure on the financing cost of those paying LIBOR-based rates. For borrowers, this offset, in large part, the reductions in interest rates in the jurisdictions where central banks have lowered policy rates. Relevant national working groups are coordinating changes to intermediate milestones in their benchmark transition programs, where appropriate, to ensure global coordination. Financial and other firms should continue to ensure that their transition programs enable them to transition to LIBOR alternatives before the end of 2021. FSB members, in collaboration with other standard-setting bodies and international institutions, will continue to monitor developments.
Related Link: Press Release
Keywords: International, Banking, Insurance, Securities, COVID-19, LIBOR, Benchmark Reforms, G20, IBORs, FSB
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleFED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.