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LIBOR Transition ..Countdown to end of 2021....What does this mean in the New World Order?


Wahoo
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They're moving away from LIBOR being based on reported rates to traded rates. It's to prevent another LIBOR scandal.

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1 hour ago, Wahoo said:

Are people aware of this ?:

https://www.bankofengland.co.uk/markets/transition-to-sterling-risk-free-rates-from-libor

 

What do they mean by Sterling Risk-Free Reference Rates?    Are we transitioning to a crypto-based currency sooner than we think?

 

been long planned, after as AWW hints the exposure of banks gaming the system (quelle surprise, Rodney)

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Frank Hovis
2 hours ago, HousePriceMania said:

What's the new system called, LIOR ?

 

 

 

SONIA (sterling overnight interest average); I was part of a group asked to go to the BoE to provide industry views.

Instead of fixing a six month borrowing at six-month LIBOR you instead pay the actual overnight sum of interest during the six months.

This takes out the forward / time risk element meaning that being on SONIA for six months is almost always going to be cheaper than borrowing at LIBOR.

This then means that existing long term loan facilities have to be amended to bring in SONIA as the reference and, because it will be cheaper, there will also be an increase in the bank's margin to leave both parties in the same position.

The issues were around agreeing this margin uplift and also how to deal with some smaller lenders who saw this change as an opportunity to either cancel existing loan agreements or bring in significantly inflated margins.

Hence requiring the BoE's involvement to make these particular banks behave reasonably.

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HousePriceMania
2 minutes ago, Frank Hovis said:

Hence requiring the BoE's involvement to make these particular banks behave reasonably.

Now, it wouldn't surprised me if someone's told some porkies at get this trhough. 

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