LIBOR and Other Benchmarks

Ensuring the integrity and reliability of major financial market benchmarks, particularly interest rate and foreign exchange (FX) benchmarks, is important for financial stability.

Interest rate benchmarks

Interest rate benchmarks play a key role in global financial markets. To ensure financial stability, benchmarks which are used extensively must be especially robust.

In July 2013, in response to cases of attempted manipulation and declining liquidity in key interbank unsecured funding markets, the FSB established an Official Sector Steering Group (OSSG), which comprises senior officials from central banks and regulatory authorities. Through the work of the OSSG, the FSB first published recommendations in 2014 to strengthen confidence in the reliability and robustness of interest rate benchmarks and identify alternative near risk-free rates. The FSB, through the OSSG, has worked continuously since then to coordinate action at the international level to encourage and support the transition away from LIBOR to new, more robust, benchmarks.

Global transition roadmap for LIBOR

In October 2020, the FSB published a Global Transition Roadmap for LIBOR. The roadmap, which was updated in June 2021, outlines steps that those with exposure to LIBOR benchmarks should take to ensure an orderly transition away from LIBOR by June 2023

In June 2023, the FSB issued a statement following the cessation of all remaining USD LIBOR settings.

IOSCO Principles for Financial Benchmarks

The FSB endorses the Principles for Financial Benchmarks developed by the International Organization of Securities Commissions (IOSCO), which cover the important issues of benchmark governance, integrity, methodology, quality and accountability.

Foreign Exchange benchmarks

Similar concerns were expressed regarding foreign exchange (FX) benchmarks, stemming in particular from the incentives for potential market malpractice linked to the structure of trading around the fixings for these benchmarks. As a result, the FSB established a working group to undertake analysis of the FX market structure and incentives that may promote particular types of trading activity around the benchmark fixings. The group published recommendations in September 2014 to address these adverse incentives and improve the construction of benchmarks.

The Global Foreign Exchange Committee was established in May 2017 as a forum bringing together central banks and private sector participants with the aim to promote a robust, fair, liquid, open, and appropriately transparent FX market in which a diverse set of participants, supported by resilient infrastructure, are able to confidently and effectively transact at competitive prices that reflect available information and in a manner that conforms to acceptable standards of behaviour.