Today, the components of many industrial products are ordinarily made in one country, assembled in another, and then sold throughout the world. This unbundling of production requires high international capital mobility; but the global financial opening has far exceeded that of foreign trade. The co-movement, on a world scale, of national stock exchange indexes and bond yields is empirically significant.
The letter also noted that new contracts entered into before December 31, 2021, should either use a reference rate other than LIBOR or have robust fallback language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation. Recently, a number of institutions have asked what would qualify as “new” use of LIBOR after 2021.