In this report, we analyze the FSB’s most recent progress report assessing implementation of FSB recommendations to reform interest rate benchmarks in light of LIBOR’s scheduled end at end-2021.   Supervisors are told again to take fast action to ensure transition, an injunction the FRB, FHFA, and the OCC have already implemented.  While finding progress in many derivative and securities markets, FSB warns that lending-market transition must accelerate.  Although some jurisdictions have developed new risk-free rates (RFRs) alongside an interbank offered rate (IBOR), many jurisdictions have yet to do so because wholesale unsecured funding markets have become too thin to support robust rates.  The FSB thus reiterates that continued reliance on LIBOR poses financial-stability risk and that firms that fail to transition run significant financial and reputational risks.  Financial institutions are instructed to end use of LIBOR in new contracts as soon as possible and accelerate efforts to end it for legacy contracts instead of delaying transition until the emergence of possible forward-looking term versions of RFRs.

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