The London Interbank Offered Rate (LIBOR) is the most commonly used benchmark reference rate in the global financial markets, underpinning approximately $400 trillion in transactions around the world.
In 2008, LIBOR’s integrity was called into question after a series of fraudulent activities connected to it. In March 2021, LIBOR’s regulator, the Financial Conduct Authority (FCA) confirmed the LIBOR cessation date by announcing that all settings for Swiss Franc, EURO, Pound Sterling and Japanese Yen and two settings for US Dollar will either cease to be provided by any administrator or no longer be representative after December 2021 and the remaining LIBOR settings for US Dollar after June 2023.
To minimize potentially adverse implications and facilitate a smooth and orderly transition from LIBOR, the World Bank has taken a number of important steps:
- In April 2021, the World Bank suspended offering fixed-spread terms for IBRD Flexible Loans as a necessary measure for managing its own asset-liability operations.
- In July 2021, the World Bank announced its new reference rates, as well as their effective dates, and switch over timelines for existing loans that use LIBOR as a reference rate.
As the World Bank prepares for the transition, it continues to actively engage various stakeholders, including its Board of Executive Directors, subject matter experts, other multilateral development banks, and borrowers to develop solutions that minimize the impact of the transition for the benefit of itself and borrowers. The World Bank will remain committed to preserving the integrity of its financial model while applying principles of fairness and transparency for its borrowers.
An e-learning course, The End of LIBOR, about World Bank’s LIBOR transition process for borrowers is available on World Bank’s Open Learning Campus.
Borrowers seeking more information about the implications to their loan agreements may sign into the Client Connection portal.
If you have any general inquiries, please contact the World Bank at firstname.lastname@example.org. For borrowers’ questions relating to specific loan agreements, please contact the World Bank at email@example.com.