European authorities encourage market participants to cease all LIBOR settings

The European Commission, the European Securities and Markets Authority (ESMA), the European Central Bank in its banking supervisory capacity (ECB Banking Supervision) and the European Banking Authority (EBA) issued today a joint statement where they strongly encourage market participants to use the time remaining until the cessation or loss of representativeness of USD LIBOR, GBP LIBOR, JPY LIBOR, CHF LIBOR and EUR LIBOR to substantially reduce their exposure to these rates. Market participants are encouraged to stop using the 35 LIBOR settings, including USD LIBOR, as a reference rate in new contracts as soon as practicable and in any event by 31 December 2021, to limit the use of any LIBOR setting published under a changed methodology, and to include robust fallback clauses nominating alternative rates in all contracts referencing LIBOR. The European Commission, ESMA, ECB Banking Supervision and the EBA will closely monitor the situation and LIBOR exposures. The full joint statement is available here.