John C Williams: Measure twice, cut once

Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the SOFR Symposium: The Final Year (Part II), 11 May 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

As prepared for delivery

It's a great pleasure once again to be sharing a platform with Andrew Bailey as we discuss the transition away from the London Interbank Offered Rate (LIBOR).

While it's no surprise that our work often brings us together, Andrew and I have joined forces on this issue to such a great extent because the LIBOR transition is essential to the integrity of the global financial system. Given its ramifications for institutions, markets, and economies around the world, strong cooperation at the international level is of critical importance.

As the saying goes, time flies, and it's hard to believe that we've reached 2021. It's been more than a decade since LIBOR has been exposed as a flawed and unreliable reference rate. And, with only 235 days until January 1, 2022, I am pleased to say that the endgame for LIBOR is clearly in sight.

This transition has been a monumental feat. The enormous amount of progress was made possible by a significant and coordinated effort across the globe, as well as in the United States. I must also mention that the Alternative Reference Rates Committee (ARRC) has done outstanding work in preparing for the move off LIBOR and, equally important, positioning us with a safe and strong foundation for the post-LIBOR world. And even as I acknowledge all the progress that has been achieved, it's important to remind everyone that there is still a lot to be done to move off LIBOR by the end of the year.

This morning I'm going to talk about key principles that we should keep in mind as we build a successful post-LIBOR world.

Before I continue, let me give the usual disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System.

Measure Twice, Cut Once

I want to take you back to only a few years ago, when I was in junior high school. At that time, ticktock was the sound coming from the clock on the wall, and a mobile device was a transistor radio. I was a young student-not of economics, but woodworking. With tools and planks in hand, I learned the number one rule of that craft: "measure twice, cut once."