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    BOT Working Group Charts Out Plan to Address LIBOR Cessation Issues

    October 11, 2019

    Representatives of the Association of the Bank of Thailand and the Association of international banks have established a working group to prepare for the cessation of London Interbank Offered Rate (LIBOR). BOT held a working group meeting to discuss ways to prepare for the cessation of LIBOR. The group emphasized the importance of communication and raising awareness among Thai financial market participants. By March 2020, the working group expects to finalize guidelines for various issues related to the preparations toward LIBOR cessation.

    To keep the market participants informed, the working group will publish progress report, along with conclusions about various issues; this information will be made available on the website of BOT. To make the transition as smooth and fair as possible for all parties, the working group has resolved to take actions in three key areas:

    • Modify the text In financial contracts that reference LIBOR and THBFIX such as loan agreements, derivative contracts, or the terms and conditions of debt instruments 
    • Prepare commercial banks to support the changing of LIBOR
    • Set interest rate to compensate in case of cessation of LIBOR and set direction of the reference interest rate of Thailand

    In the meantime, the working group asks market participants that have financial transactions based on the LIBOR or THBFIX interest rate to expedite the exploration of existing transaction or contract volumes. It may consult with commercial banks or counterparties in advance go adjust existing contracts in a timely manner and to assess the initial impact in various areas. The end of the use of LIBOR  by 2021 will directly affect financial transactions that reference LIBOR interest rates and indirectly affect certain other types of transactions related to THBFIX, which has a financial market in Thailand. 

     

    Related Link (in Thai)News Release

     

    Keywords: Asia Pacific, Thailand, Banking, LIBOR, THBFIX, Interest Rate Benchmarks, BOT

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