If China is to achieve its potential to grow, it will have to avoid what economists call the “middle-income trap,” in which developing countries that seem destined to join the club of advanced economies suddenly see their growth stagnate for many years.
The ARRC’s work began by focusing on creating a derivatives market for the Secured Overnight Financing Rate (SOFR), its recommended alternative to U.S. dollar LIBOR, because end users require derivatives markets to hedge their cash exposures. The CME Group, LCH, and Intercontinental Exchange, or ICE, all now offer futures or swaps markets on SOFR, and participation in these markets is growing.