LIBOR to Stop Publishing Settings; CUs Encouraged to Transition Away Immediately

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The London Inter-bank Offered Rate (LIBOR) administrator announced it will stop publishing the one-week and two-month LIBOR settings immediately following the Dec. 31, 2021, LIBOR publication. The remaining LIBOR settings will cease immediately following the LIBOR publication on June 30, 2023. While the extension of the publication of certain LIBOR settings through June 30, 2023, is not an opportunity to continue using LIBOR, it will allow some legacy LIBOR contracts to mature naturally.

The NCUA encourages all federally insured credit unions to transition away from using the U.S. dollar LIBOR settings as soon as possible, but no later than Dec. 31, 2021. Failure to prepare for LIBOR disruptions could undermine a federally insured credit union’s financial stability, and safety and soundness. As noted in the Federal Financial Institutions Examination Council’s (FFIEC) July 1, 2020, Joint Statement on Managing the LIBOR Transition, the LIBOR transition is a significant event that credit unions should manage carefully. The FFIEC statement recommends that new financial contracts use a reference rate other than LIBOR or have robust fallback language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation.

Click here for the Letter to Credit Unions. 

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