IBOR transition: a watershed moment in global financial markets
For decades, financial markets around the world have relied on interbank offered rates, or ‘IBORs’, as a fundamental benchmark for interest rates. Today, these benchmark interest rates, such as the London Interbank Offered rate (‘LIBOR’), are embedded in a vast range of financial instruments including bonds, loans, mortgages and derivative contracts whose value runs into trillions of euros.
That is now changing.
In 2013, the G20 governments asked the Financial Stability Board or ‘FSB’ to review the use of benchmark rates in the financial industry. Later that year, the FSB recommended a move away from the reliance on interbank offered rates and the adoption of safer and more transparent benchmarks for setting interest rates across the financial industry. The International Organisation of Securities Commissions (IOSCO) issued a set of guiding principles to this end. Today, regulatory authorities, industry associations, banks and other institutions across the globe are working on a historic transition to a global system of alternative reference rates.
This transition will bring important benefits for all participants in financial markets. However, significant work will be required to ensure a smooth transition and to safeguard the legitimate interests of all parties at this time of change.
As a large, global bank, Deutsche Bank is committed to serving our clients and to playing our role in the wider financial system as we navigate this change together. We have committed significant resources to the task. A Management Board sponsored Benchmark Transition Program has been established. The Group’s priority is to engage with and support our clients through all aspects of this transition.
For more information, please contact IBORtransition@db.com.