On the first day of spring, the Federal Deposit Insurance Corporation (FDIC) today issued the Winter 2018 issue of Supervisory Insights, which includes a feature article examining the future of, and alternatives to, the London Inter-bank Offered Rate (LIBOR).
LIBOR is a popular reference rate for commercial loans, residential mortgages, derivatives and swaps, and other credit instruments. While LIBOR often is viewed as a reference rate used by larger financial institutions, it is also important to smaller community banks and savings institutions. Initiatives are underway that could transition financial markets away from the use of LIBOR as a reference rate after 2021. Therefore, financial institutions must plan for this potential change and the FDIC provides guidance in this article.
The full edition of the FDIC’s Supervisory Highlights can be found here.