Masayoshi Amamiya: LIBOR transition in the final stage - there will be no Deus ex Machina

Speech by Mr Masayoshi Amamiya, Deputy Governor of the Bank of Japan, at the NIKKEI Financial Online Seminar, held by Nikkei, 8 June 2021.

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

Introduction

It is my pleasure to have the opportunity to speak to you today about the LIBOR transition at the NIKKEI Financial Online Seminar.

The LIBOR transition refers to the replacement of LIBOR with alternative interest rate benchmarks in financial products referencing LIBOR. It is a significant issue that we have been facing not only in Japanese financial markets but also in global financial markets, to ensure smooth transactions going forward.

This year, a landmark event took place on March 5 with regard to the LIBOR transition. On that day, the future cessation and loss of representativeness of all the LIBOR currency tenor settings were formally determined. Accordingly, the publication of LIBOR will be ceased for most of the currency tenor settings, including those of Japanese yen, at the end of this year. On the other hand, major U.S. dollar LIBOR tenor settings that are most widely used will be ceased at the end of June 2023.

Many market participants had already been aware of the possibility of the cessation of LIBOR long before this event; nevertheless, it was still significant that these official announcements on the future cessation of LIBOR were actually made. In other words, it was fully clarified that yen LIBOR, which had been used so widely, would no longer be available at the end of this year for sure. Now that the deadline for the transition is unarguably fixed, we only have less than seven months until the permanent cessation of yen LIBOR.