On July 9, 2015, the Financial Stability Board published an interim progress report on reforms to existing interest rate benchmarks and on the construction and implementation of alternative near risk-free interest rate benchmarks. This follows the FSB’s recommendations for reforms in this area, published in July 2014. The report examines the progress made towards achieving those recommendations. The FSB’s recommendations in the July 2014 report called for a strengthening in existing interest rate benchmarks, such as LIBOR, EURIBOR and TIBOR, collectively coined “IBORs,” and other reference rates based on unsecured bank funding costs by underpinning them to the greatest extent possible with transaction data. In addition, the FSB proposed steps to develop alternative near risk-free interest rate benchmarks, given that there are certain financial transactions, including many derivatives transactions, that it considers better suited to such reference rates.

Since July 2014, the administrators of the most widely used IBORs have taken steps to accommodate the FSB’s recommendations. Such steps included reviews of respective benchmark methodologies and definitions, data collection exercises and feasibility studies, consideration of transitional and legal issues, and broad consultations with submitting banks, users and other stakeholders. Also, detailed data collection exercises have been implemented in key markets, and work is now ongoing to identify potential alternative near risk-free interest rate benchmarks, where these do not currently exist. The FSB will continue to monitor progress in implementing the FSB’s recommendations in the year ahead and will prepare an updated progress report for publication by the FSB in July 2016.

The interim progress report is available at: http://www.financialstabilityboard.org/wp-content/uploads/OSSG-interest-rate-benchmarks-progress-report-July-201 5.pdf