The Libor interbank rate, a global benchmark that has become controversial after numerous scandals, will no longer be usable for most currencies from December 31, the British market regulator (FCA) announced on Friday.
Read also: Société Générale caught up with the Libor scandal
The Libor, or the “
London Interbank Offered Rate
”, has long been a benchmark interbank rate in the financial world, affecting a huge amount of financial products including some loans to households and businesses.
The FCA estimated at the end of January that contracts using Libor as the benchmark rate still represent $ 260 trillion.
The Bank of England and the FCA have clearly established in recent years that the absence of an active market has made it impossible to maintain the Libor, which has become unsuitable,
" said the regulator in a statement.
As of December 31, Libor rates will no longer be updated for the Pound, Euro, Swiss Franc and Yen, as well as for some US rates, with the latest dollar rates being extended until June 30. 2023. "
The time remaining is limited, my message to businesses is clear: act now to complete your transition before the end of the year,
" Andrew Bailey, Governor of the Bank of England, warned in a statement.
The Libor is calculated from the main world banks, which announce from London the rate at which they believe they can borrow a "
from other banks for terms ranging from one day to one year.
Read also: Libor: agreement in sight in the United Kingdom
But in 2012, several of the banks participating in the rate calculation were accused of having distorted the mechanism to their advantage.
Several large banks have paid heavy fines such as Deutsche Bank, UBS, RBS, Societe Generale or Rabobank, for billions of dollars in total.
Former UBS and Citigroup bank trader Tom Hayes has just been released from prison after serving half of an eleven-year prison sentence.