The end of LIBOR - what it means for you
What do you need to do when LIBOR is scrapped? John Mongelard considers alternatives such as SONIA, the Bank of England base rate and Bloomberg’s Short-Term Bank Yield Index, looks at the legal implications and explains how SMEs can avoid surprises
A victim of its own success, the London InterBank Offer Rate (LIBOR) interest rate has crept into many loans and contracts. But, from the end of 2021, it will be scrapped. It was based on a form of lending that banks no longer undertake, so regulators have said it must end. But that is not the end of the story. We will need to find a replacement – another liquid rate, one that can be forward-looking. And we’ll have to navigate value transfer issues when contracts switch rates. But, more importantly, if you run a business, what exactly do you need to do?