The Financial Stability Board (“FSB“) recently published a statement on reforms to interbank offered rates (“IBORs“) and the development of overnight risk-free, or nearly risk-free, rates (“RFRs“) and term rates. Release.

“The FSB continues to encourage the development and adoption of these overnight RFRs where appropriate, for example in business where term properties are not needed, or where exposure to bank credit risk is not necessary or desirable. This will enhance financial stability. […]

An overnight RFR may not, however, be the optimal rate in all the cases where term IBORs are currently used. The FSB recognises that in some cases there may be a role for term rates, including RFR-derived term rates, or term rates derived from other liquid market.”