Replacing it will be anything but easy.
It also means any regular investor with a floating rate loan will experience some changes in the near-term.
Libor, or the London Interbank Offered Rate, is the daily-calculated interest rate at which banks lend to one another. It is also the benchmark rate for trillions of US dollar-denominated contracts and loans, such as floating rate mortgages.
The leading proposed replacement is SOFR, the Secured Overnight Financing Rate, which is published by the New York Federal Reserve and based on actual overnight transactions financial companies borrow cash using US Treasury securities — or government debt — as collateral.
One advantage of SOFR is that it is harder to manipulate, because it is based on real transactions, unlike Libor.
But many banks aren’t happy with SOFR as the chosen successor, claiming it is missing important attributes that made Libor so useful.
“The market is not particularly well prepared at this point in time,”…