LIBOR (London Inter-Bank Offered Rate) has been the most widely used interest rate benchmark worldwide and played a central role in the global financial system for decades. LIBOR rates represented the average rate at which a panel of banks could obtain wholesale unsecured funding, but since it was only indirectly linked to lending transactions, regulators determined that LIBOR is no longer a viable benchmark and should not be used going forward. As a result, global regulatory bodies took steps in 2017 to embark on global IBOR reform and develop a phased transition plan from LIBOR to alternative reference rates for all currencies and tenors.
The transition from LIBOR to an alternative reference rate is a challenging undertaking, and for the IDB, the majority of the Bank´s loans, debt, investments, and derivatives are based on LIBOR. As of the end of 2021, market participants are no longer able to enter into contracts that are LIBOR-based. This transition from LIBOR requires a complete shift for all IDB’s financial instruments based on LIBOR to be transitioned to new replacement indices over the course of 2022, and at the very latest by the final cessation date of June 30, 2023 for USD LIBOR tenors.
As regulators have pushed market participants to adopt a replacement rate that is based on frequent and observable transactions, here at the IDB we have proactively and strategically prepared the bank and our member countries to navigate this significant market-wide transition.
This web page serves as your primary resource and central location for more information on LIBOR transition generally, as well as specific information on IDB’s progress on LIBOR transition.