Work is underway to develop alternatives to LIBOR and other Interbank Offered Rates.

LIBOR is a widely used interest rate benchmark on which financial products across the globe have been based for more than three decades—and it is due to be replaced by the end of 2021.

Across the globe, central banking authorities and various industry participants, including J.P. Morgan, are working together to identify alternative rates based on core principles established by the International Organization of Securities Commissions (IOSCO), an organization that is the global standard-setter for securities regulation.

You can expect J.P. Morgan to keep you updated on key developments.

The London Interbank Offered Rate (LIBOR) is used to, among other things, calculate interest rates for certain products that firms offer to clients. It is based on daily quotes from a select group of banks in London, which reflect how much it would cost to borrow money, without putting up any collateral, for certain lengths of time, including overnight, one-month, three-month, six-month and one-year periods.

LIBOR has been called the “world’s most important number” because it has been the most widely used benchmark among the IBORs (Interbank Offered Rates). It has been the basis for everything from consumer contracts to $190 trillion of USD interest rate derivatives.1

In total, $400 trillion in assets across currencies,2 including the British pound, Japanese yen, Swiss franc, euro and the U.S. dollar, will need to migrate away from LIBOR toward alternative rates.

In recent years, as banks have reduced their short-term unsecured borrowing, the market that LIBOR seeks to measure has become less active. Against this backdrop, the Financial Conduct Authority, or FCA, which is the U.K. regulator tasked with overseeing LIBOR, has said that it will not compel banks to submit daily quotes beyond 2021.

The Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system, has been coordinating international efforts on benchmark reform and the transition from LIBOR. There are national working groups in FSB jurisdictions, including the United States, Japan and the European Union.

J.P. Morgan transacts with clients in over 100 different countries. We have been engaged from the start in global transition efforts, and have insights on reform efforts in different regions and potential impacts on global markets.

What this transition may mean for you depends on the type of investments or credit products you have. We are committed to providing you with new information as it becomes available. Your J.P. Morgan team is also available to answer questions you may have along the way.

A chart showing what the alternatives used in the United States, United Kingdom, Swtizerland, Japan and the European Union.

1 Leaving LIBOR: A Landmark Transition,” J.P. Morgan, January 2019, https://www.jpmorgan.com/global/markets/libor-sofr.


2 Beyond LIBOR: A primer on the new benchmark rates,” BIS, March 2019, https://www.bis.org/publ/qtrpdf/r_qt1903e.htm.