The Economist: Time To Switch Rates From Libor
Jun 7, 2019
The Economist covered our report on the LIBOR transition, ‘Time to Switch Rates’, which highlights the increasing need for banks to switch rates before it’s too late.
It explained that although the shift has begun, our report makes clear that there is still much to do, especially in the dollar and cash markets. Moreover, virtually no loans linked to the new rates have been made at all. In cash markets, our report says, “LIBOR-based contracts are still being entered into at a rate little reduced from 2017.” Little has been done to move existing contracts, of which many last beyond 2021, off LIBOR.
To hasten the handover, our report recommends that regulators remove disincentives to switch from LIBOR-based derivatives; and make up their minds about credit-sensitive benchmarks. Clearing houses should move faster to base their rules on SOFR, which would foster demand for derivatives. And banks should stop procrastinating.