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LIBOR Still Needs a Legislative Fix

The delay in LIBOR retirement just puts off the inevitable; lawmakers need to clarify what benchmarks will replace LIBOR in financial contracts whenever it finally ceases to be used.

By William Shaw | December 04, 2020 at 10:20 PM

Delaying the end of dollar LIBOR until mid-2023 may provide breathing room, but it doesn’t remove the need for a legislative solution for contracts that will still be linked to the benchmark when it eventually expires.

That’s the view of Tom Wipf, who heads the Federal Reserve-backed group responsible for guiding the shift away from the London interbank offered rate (LIBOR) in the United States. There may be hundreds of billions of dollars’ worth of legacy contracts that lack a clear replacement rate and pose a threat to financial stability, meaning that policymakers still need to find answers.

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