What Does Replacing LIBOR Mean for Financial Services Firms?
The London Interbank Offered Rate (LIBOR), is a series of benchmark interest rates and has been called the “world’s most important number.” It is a globally recognized base rate for pricing loans, debt, and derivatives. As a key part of the financial services infrastructure, more than $240 trillion in products reference LIBOR.
As its underlying transactions have diminished, regulators have announced a target date to replace LIBOR and begun the process of identifying and creating alternative rates. However, these rates are structurally different from LIBOR and it is unclear how existing products referencing it will change, and what new products will emerge. There is the possibility of significant customer and economic impact and uncertainty over how this will develop.
While this may not be the final word, LIBOR’s ubiquity and potential sunset means it is time for institutions to focus on the LIBOR replacement timeline, a potentially very significant program of activity.
LIBOR is a cornerstone of the financial industry today, and a transition away from it would impact a vast array of products, businesses, systems and processes, as well as customers and counterparties.Serge Gwynne, Partner, Oliver Wyman
While the discontinuation of LIBOR may seem far away, the magnitude of the transition and potential for financial impact means financial institutions must start mobilizing near term.Adam Schneider, Partner, Oliver Wyman
Special Series: Hospital systems seek sustainability, scale, and relevance. Here's why models that rethink traditio… https://t.co/Ue34sVjWby
"I love working somewhere that blends intellectual intensity and passion for achievement with a relaxed atmosphere”… https://t.co/8A5K54gqyZ
RT @BRINKAsia: In order to capitalize on this largely untapped technology and remain resilient to the inevitable #AI revolution, it is in A…
RT @BRINKNewsNow: Given the breadth of challenges faced by the military, seasoned officers bring to the private sector a no-nonsense perspe…
RT @CarenetHealth: Those who understand trends, vectors, and how to create strategic control and value will be best positioned. 2030, here…
RT @TheEconomist: Pre-emptive measures would bring companies bigger rewards than ignoring global warming https://t.co/lEubQz631z
The potential benefits of AI are clear, but its rapid adoption creates a challenge from a second line risk manageme… https://t.co/b0jlbr1sgY
Can fintechs help regulators? Deborah O'Neill argues that they do, & that collaboration can enhance stream of innov… https://t.co/PixgZpWWgY
Une soirée riche en échanges : présentation du cabinet, étude de cas & cocktail hier soir dans nos locaux à #Paris… https://t.co/vpj0M9XwDn
We’re very happy to welcome @cmi_ceo Ann Francke to host our #IWD2019 panel discussion with our fellow @MMC_Global… https://t.co/OupvleXMmv