Libor Must Shift to Market-Pricing System, Say U.S. Regulators

Financial Stability Oversight Council says benchmark rates should be ‘anchored in observable transactions.’

Interest-rate benchmarks must be tied to market transactions instead of estimates to protect the global financial system against mis-allocation of capital and mismanagement of risk, according to a panel of U.S. regulators.

U.S. and overseas agencies must identify alternatives to the London interbank offered rate “that are anchored in observable transactions and are supported by appropriate governance structures,” the Financial Stability Oversight Council said in a report released today.

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