Federal regulators issued a joint statement encouraging banks to cease entering into new contracts that use U.S. dollar LIBOR as a reference rate as soon as practicable and no later than Dec. 31, 2021, to facilitate the transition away from LIBOR.
Also, LIBOR’s administrator, ICE Benchmark Administration Limited, proposed to cease publication of the one-week and two-month USD LIBOR settings immediately following the LIBOR publication on Dec. 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.
The statements, which were welcomed by the Fed, reaffirmed the regulators’ position that new contracts entered into before Dec. 31, 2021, should use either a reference rate other than LIBOR or have robust fallback language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation.
ICBA serves on the Alternative Reference Committee implementing the transition away from LIBOR and encourages community banks to prepare for the transition.