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    Question

    Which reference rate is likely to get scrapped completely by the end of year 2021?

    A LIBOR Correct Answer Incorrect Answer
    B MIBOR Correct Answer Incorrect Answer
    C Repo rate Correct Answer Incorrect Answer
    D CRR Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    LIBOR is likely to be fully withdrawn by the end of the year 2021. RBI has directed the banks to go for alternative reference rates. The Financial Conduct Authority (FCA), UK has announced on March 05, 2021 that LIBOR will either cease to be provided by any administrator or no longer be a representative rate: ·         Immediately after December 31, 2021, in the case of all Pound sterling, Euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and ·         Immediately after June 30, 2023, in the case of the remaining US dollar settings   Therefore, banks and financial institutions and their customers should stop using LIBOR as a benchmark and instead use any widely accepted ARR, as soon as practicable and in any case by December 31, 2021.

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