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Key resources for firms transitioning from LIBOR

Bank of England - Educational guides and resources to support firms in transitioning from LIBOR to SONIA in sterling markets.

"What is LIBOR?

LIBOR is an interest rate based on the rates at which banks lend to each other. LIBOR was one of the main interest rate benchmarks used in financial markets, but it is being phased out. Historically it has determined interest rates for financial contracts around the world, worth trillions of pounds. LIBOR has been commonly referenced in both financial contracts, such as loans or deposit facilities, and non-financial contracts such as commercial leasing contracts and the discount rate for valuations.

Why do firms need to transition from LIBOR?

Since the global financial crisis in 2008-09, activity in the markets that LIBOR measures has reduced. The low volume of underlying transactions meant that LIBOR is no longer sustainable. There are other more robust rates, including the Sterling Overnight Index Average (SONIA) benchmark, which the Bank of England produces.

In line with announcementsOpens in a new window from the Financial Conduct Authority (FCA), publication of 24 of the 35 LIBOR settings ceased from 1 January 2022. In line with further announcementsOpens in a new window from the FCA, three yen LIBOR settings continued for the duration of 2022 on a ‘synthetic’ basis and have now ceased. 1- and 6-month sterling LIBOR will continue on a synthetic basis until end-March 2023, and 3-month sterling LIBOR will continue on a synthetic basis until end-March 2024. Five US dollar LIBOR settings will continue to be calculated using panel bank submissions until end-June 2023, although its use for new business has been restricted since end-2021, with limited exceptions."



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