Whereas reforming interest rate benchmarks have been developed in Japan and abroad, the possibility that the London Interbank Offered Rate (LIBOR) will be permanently discontinued after the end of 2021 has been increasing. While LIBOR is mainly referenced in derivative contracts such as interest rate swaps, it is also quoted in a significant number of cash products including corporate loans and bonds.
Additionally, it is used in wide range of users, including not only financial institutions but also non-financial corporate and institutional investors. In this regard, there is the possibility of disruption to users if LIBOR were ceased without sufficient preparation.
Through close cooperation with the Bank of Japan and other relevant institutions, the Financial Services Agency of Japan (JFSA) will publish or provide links to related materials to help market participants, including financial institutions and non-financial corporate and institutional investors better understand the necessity of taking actions in preparation for the cessation of LIBOR, and also support market-led initiatives for a smooth transition away from LIBOR.
－ Information will be updated accordingly －
Joint Survey on the Use of LIBOR (JFSA and Bank of Japan)
The JFSA, together with the Bank of Japan, is conducting a joint survey of financial institutions, including banks, securities companies and insurance companies, about their quantitative LIBOR exposures and their qualitative LIBOR transition progress. The aim of this survey is to allow supervisory authorities to identify financial institutions’ quantification of LIBOR exposure and the number of contracts referencing LIBOR as well as financial institutions’ progress toward transitioning away from LIBOR to alternative reference rates and their internal preparedness for this transition. We expect this publication will further promote the transition measures taken by each financial institution in a timely and smoothly manner. This survey is planned to be conducted regularly to follow up the progress and status of LIBOR transition.
Summary of Survey Results on the Use of LIBOR and Actions Needed （JFSA and Bank of Japan）
- March 13, 2020
Information from JFSA
Speeches
“How Financial Institutions should act for LIBOR cessation”, MORITA Tokio, Director-General of the Strategy Development and Management Bureau (available in Japanese) - January 24, 2020, At Friday Regular Meeting of Kinzai Institute for Financial Affairs, Inc, Tokyo
Keynote Speech “Challenges and Approaches on LIBOR cessation issue”, ISHIMURA Kozo, Director of the Risk Analysis Division, Strategy Development and Management Bureau (available in Japanese) - November 7, 2019, At PwC Japan Seminar, Tokyo
Opening Remarks “Main Points of the Public Consultation and Overview of Deliberations on Interest Rate Benchmark Reform in Japan and Abroad”, MORITA Tokio, Director-General of the Strategy Development and Management Bureau (available in Japanese)
Summary points
- August 1 2019, At Interest Rate Benchmark Reform Forum in Bank of Japan, Tokyo
Meetings with Industry Associations
The National Association of Shinkin Banks/ National Central Society of Credit Cooperatives/ Trust Companies Association of Japan/ National Association of Labour Banks (available in Japanese) – November, 2019
Regional Banks Association of Japan/ Second Association of Regional Banks/ Japan Securities Dealers Association/ The Life Insurance Association of Japan/ The General Insurance Association of Japan (available in Japanese) - September, 2019
Major Banks (available in Japanese) - August 2, 2019
Staff Reports
“Progress of reforming major interest rate benchmarks and future expectation”, Kinzai Financial Weekly (available in Japanese) - January 15, 2018
Other Links
Bank of Japan
Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks
Japanese Bankers Association
