The global benchmarks replacing Libor

Libor is an interest rate based on quotes from banks on how much it would cost to borrow money from each other. It is a price reference for financial contracts worth as much as $340 trillion globally, from complex derivatives to home loans and credit cards.

Attempts by banks to rig the 50-year old benchmark denominated in sterling, yen, Swiss franc, dollar and euro, prompted regulators to call time on it. Widespread use of Libor is meant to end by December 2021 in Britain and the US.

Here is a list of some of the alternative benchmarks designed to replace it: futures and swaps has grown steadily and more than $236 billion notional in cash instruments has been issued. A Federal Reserve-convened industry group has set up fallback language for the problem of contracts linked to expiring Libor.

Problems: Issuance of Sofr notes is mainly by state-linked entities and financial institutions. The market is still awaiting a forwardlooking term rate, as opposed to one fixed overnight such as Sofr. Problems: Europe is lagging behind the United States and Britain in transition due to slow progress in agreeing the details of the new benchmarks. The lack of forward-looking term rates could limit corporate borrowing. Libor replacement, and banks have begun selling Sonia-linked bonds and loans. Volumes of Sonia swaps trading have grown steadily to become nearly half the market. Problems: There is no firm deadline for Libor to be discontinued, meaning many banks and borrowers are dragging their heels. As in other markets, there is also a lack of a forward-looking term rate, making corporate borrowers uneasy.