Now, many jurisdictions are exploring whether they need to develop term risk-free benchmarks, say for one- or three-month maturities, for use in mortgages and cash markets and perhaps also for some derivatives. This might help the transition from LIBOR-type benchmarks, where term rates are more widely used than overnight rates.
For this to happen, such benchmarks would have to be consistent with the IOSCO standards. The pace of all this work accelerated last summer thanks to Andrew Bailey, Chief Executive of the United Kingdom’s Financial Conduct Authority (FCA), which regulates LIBOR. He announced that LIBOR might be sustainable only until the end of 2021.