Libor's Looming Demise Is a Mammoth Financial Engineering Task
- A matter of when, not if, rate becomes ‘unusable’: Wipf
- ARRC has released principles on contract fallback language
Photographer: Matthew Lloyd/Bloomberg
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The end is coming for Libor and financial markets need to get ready.
That’s the view of Morgan Stanley’s Tom Wipf. He heads the Federal Reserve’s Alternative Reference Rates Committee, which on Thursday released recommendations for language to enable contracts linked to the beleaguered London interbank offered rate to work even if the benchmark disappears. Darrell Duffie, a finance professor at Stanford University, has also underscored the risks involved with shifting away from a set of benchmarks that underpin some $200 trillion in dollar-denominated instruments.