Future sustainability could not be guaranteed
London interbank offered rate (libor) will continue with investment banks’ backing until it is phased out in 2021, the Financial Conduct Authority has clarified today.
UK’s financial watchdog said all 20 banks had pledged to support the Libor until 2021 and will work towards developing an alternative benchmark.
The Financial Conduct Authority has been working with the banks to finalize an agreement for them to remain on the panels they currently submit to until the end of 2021, it said in a statement on Friday.
Andrew Bailey, chief executive of the UK’s financial watchdog, said in a speech earlier this year that “the absence of active underlying markets” meant the future sustainability of Libor could not be guaranteed.
The move has been welcomed by many regulators as it was linked to some of the banking industry’s largest scandals.
According to Reuters, central banks in Switzerland and the United States are also taking steps to replace Libor with alternative rates in their currency denomination. The European Central Bank has also looking at similar action.