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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551

DIVISION OF SUPERVISION

AND REGULATION

SR 20-27

November 30, 2020

TO THE OFFICER IN CHARGE OF SUPERVISION AND APPROPRIATE 

SUPERVISORY AND EXAMINATION STAFF AT EACH FEDERAL RESERVE BANK 

AND INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE

SUBJECT: Interagency Statement on LIBOR Transition

Applicability: This letter applies to all institutions supervised by the Federal Reserve.

On November 30, 2020, the Board of Governors of the Federal Reserve System, the 

Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation 

(collectively, the agencies) issued a statement to encourage banks1 to transition away from U.S. 

dollar (USD) LIBOR as reference rate as soon as practicable.

The administrator of LIBOR has announced it will consult on its intention to cease the 

publication of the one week and two month USD LIBOR settings immediately following the 

LIBOR publication on December 31, 2021, and the remaining USD LIBOR settings immediately 

following the LIBOR publication on June 30, 2023.

2

 Extending the publication of certain USD 

LIBOR tenors until June 30, 2023 would allow most legacy USD LIBOR contracts to mature 

before LIBOR experiences disruptions. Failure to prepare for disruptions to USD LIBOR, 

including operating with insufficiently robust fallback language, could undermine financial 

stability and banks’ safety and soundness.

Given consumer protection, litigation, and reputation risks, the agencies believe entering 

into new contracts that use USD LIBOR as a reference rate after December 31, 2021, would 

create safety and soundness risks and will examine bank practices accordingly.3

 Therefore, the 

agencies encourage banks to cease entering into new contracts that use USD LIBOR as a 

reference rate as soon as practicable and in any event by December 31, 2021, in order to 

1 For purposes of this guidance, the term “bank” includes depository institutions under the Federal Deposit Insurance 

Act (12 U.S.C. 1813(c)(1)), U.S. branches and agencies of foreign banks, Edge and agreement corporations, bank 

holding companies, and savings and loan holding companies.

2 Previously, the Contributor Banks to the USD LIBOR panel had agreed to serve as Contributor Banks only until

December 31, 2021. 3 For this purpose, “new contracts” would include new USD LIBOR lending; new USD LIBOR debt, preferred 

equity, or securitization issuance; and new USD LIBOR derivatives transactions.
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facilitate an orderly—and safe and sound— LIBOR transition. New contracts entered into 

before December 31, 2021 should either utilize a reference rate other than LIBOR or have robust 

fallback language that includes a clearly defined alternative reference rate after LIBOR’s 

discontinuation.

Reserve Banks are asked to distribute this letter to the supervised organizations in their 

districts and to appropriate supervisory staff. In addition, institutions may send questions via the 

Board’s public website.4

Michael S. Gibson

Director

Division of

Supervision and Regulation

Attachments: 

Interagency Statement on LIBOR Transition

4 See http://www.federalreserve.gov/apps/contactus/feedback.aspx
Board of Governors of the Federal Reserve System 

Federal Deposit Insurance Corporation 

Office of the Comptroller of the Currency

Statement on LIBOR Transition

November 30, 2020

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of 

the Currency, and the Federal Deposit Insurance Corporation (collectively, the agencies) are 

issuing this statement to encourage banks to transition away from U.S. dollar (USD) LIBOR as 

soon as practicable.

1

Background and Discussion

The FFIEC’s “Joint Statement on Managing the LIBOR Transition”2 noted that the 

LIBOR transition is a significant event that banks should closely manage. The FFIEC statement 

further explained that new financial contracts should either utilize a reference rate other than 

LIBOR or have robust fallback language that includes a clearly defined alternative reference rate 

after LIBOR’s discontinuation. Separately, the agencies recently issued a statement that says a 

bank may use any reference rate for its loans that the bank determines to be appropriate for its 

funding model and customer needs.

3

 

The administrator of LIBOR has announced it will consult on its intention to cease the 

publication of the one week and two month USD LIBOR settings immediately following the 

LIBOR publication on December 31, 2021, and the remaining USD LIBOR settings immediately 

following the LIBOR publication on June 30, 2023.

4

 Extending the publication of certain USD 

LIBOR tenors until June 30, 2023 would allow most legacy USD LIBOR contracts to mature 

before LIBOR experiences disruptions. Failure to prepare for disruptions to USD LIBOR, 

including operating with insufficiently robust fallback language, could undermine financial 

stability and banks’ safety and soundness.5 

Given consumer protection, litigation, and reputation risks, the agencies believe entering 

into new contracts that use USD LIBOR as a reference rate after December 31, 2021, would 

1 For purposes of this guidance, the term “bank” includes depository institutions under the Federal Deposit Insurance 

Act (12 U.S.C. 1813(c)(1)), U.S. branches and agencies of foreign banks, Edge and agreement corporations, bank 

holding companies, and savings and loan holding companies. 2

https://www.ffiec.gov/press/PDF/FFIEC%20Statement%20on%20Managing%20the%20LIBOR%20Transition.pdf. 3 See Federal Reserve Supervision and Regulation Letter 20-25 (November 6, 2020); OCC Bulletin 2020-98 

(November 6, 2020); and FDIC Financial Institution Letter 104-2020 (November 6, 2020). 4 Previously, the Contributor Banks to the USD LIBOR panel had agreed to serve as Contributor Banks only until

December 31, 2021. 5 For example, a disorderly transition away from LIBOR could pose consumer protection, litigation, and reputational 

risks. Various provisions of federal law require banks to operate in a safe and sound manner. See, e.g., 12 U.S.C. 

321–338a, 1467a(g), 1818(b), 1844(b), and 3101 et seq. 
create safety and soundness risks and will examine bank practices accordingly.

6

 Therefore, the 

agencies encourage banks to cease entering into new contracts that use USD LIBOR as a 

reference rate as soon as practicable and in any event by December 31, 2021. New contracts 

entered into before December 31, 2021 should either utilize a reference rate other than LIBOR or 

have robust fallback language that includes a clearly defined alternative reference rate after 

LIBOR’s discontinuation. These actions are necessary to facilitate an orderly— and safe and 

sound— LIBOR transition. If the administrator of LIBOR extends the publication of USD 

LIBOR beyond December 31, 2021, the agencies recognize that there may be limited 

circumstances when it would be appropriate for a bank to enter into new USD LIBOR contracts 

after December 31, 2021, such as: (i) transactions executed for purposes of required participation 

in a central counterparty auction procedure in the case of a member default, including 

transactions to hedge the resulting USD LIBOR exposure; (ii) market making in support of client 

activity related to USD LIBOR transactions executed before January 1, 2022; (iii) transactions 

that reduce or hedge the bank’s or any client of the bank’s USD LIBOR exposure on contracts 

entered into before January 1, 2022; and (iv) novations of USD LIBOR transactions executed 

before January 1, 2022. 

Conclusion

The LIBOR transition is a significant event that poses complex challenges for banks and 

the financial system. The agencies encourage banks to cease entering into new contracts that use 

USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021,

in order to facilitate an orderly—and safe and sound— LIBOR transition. 

This statement should not be read as announcing that the LIBOR benchmark has ceased, 

or will cease, to be provided permanently or indefinitely or that it is not, or no longer will be, 

representative for the purposes of language adopted by the International Swaps and Derivatives 

Association. 

6 For this purpose, “new contracts” would include new USD LIBOR lending; new USD LIBOR debt, preferred 

equity, or securitization issuance; and new USD LIBOR derivatives transactions.