Why is LIBOR being phased out?

Further to the 2007 financial crisis, in particular, the decline in volume of transactions on the unsecured interbank lending resulted into an underlying market which has not been an active one ever since. Today’s publication of LIBOR rates relies heavily on "expert judgement" and this situation is foreseen as unsustainable by regulators as it represents potentially a serious source of vulnerability and systemic risk.

The UK Financial Conduct Authority (FCA) announced that it would no longer persuade or require LIBOR panel banks to provide submissions after 2021 and thus LIBOR rates would eventually need to be replaced.

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