Furthermore, as the ratio of underlying transactions to the gross notional value of financial contracts referencing Libor continues to dwindle, the risk that Libor will not be sustained over the long term increases. From a policymaker’s perspective, this mismatch poses risks to the stability of the global financial system, especially given the systemic importance of Libor.
This is most welcome, and we should all work to bring the review of the Single Rulebook to rapid and successful conclusion. This, of course, will not exhaust the quest for more sophisticated, proportionate and cost-efficient regulatory solutions.