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6 structural issues complicating LIBOR transition

Published on: 23 October 2020
Published by: Law360
  • 6 structural issues complicating LIBOR transition
  • Alternative benchmark palooza fails to address all issues
  • Why Libor is so entrenched
  • 1 Impossible interest rate in the banking book calculations
  • 2 Capital requirements become prohibitively expensive due to nonmodeled risk factors
  • 3 Complex cross-border derivatives transactions that don’t translate
  • 4 Lack of credit risk could provoke volatility
  • 5 Floating-rate loans create recipe for litigation
  • 6 Unknown credit risk
  • Lack of standardisation breeds inefficiency

Article summary

Law360, Expert analysis: LIBOR was never perfect. Launched by the British Bankers’ Association (BBA) in 1984, the London Interbank Offered Rate became the official benchmark interest rate at which banks borrow from one another starting in 1986. or take a trial to read the full analysis.

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