the yield on 10 - year treasury bonds, the yield on 3 - month treasury bills, and the 10 - year triple - b corporate yield. 3 that is, the supervisory projections of net interest income are primarily based on models that implicitly assume that other rates such as libor or sofr move passively with short - term treasury rates. given these mechanics, choosing to lend at sofr rather than libor will not result in lower projections of net interest income under stress in the stress - test calculations of the federal reserve. i hope i have been able to provide you with some further clarity today. i am sure that the rest of the roundtable will do so as well. i want to applaud the members of the arrc who are working hard to make sure this threat to financial stability is avoided. 1 vice chair for supervision quarles also serves as chair of the financial stability board. the remarks represent 2 / 3 bis central bankers'speeches his own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 the arrc ’ s recommendations for fallback www. newyorkfed. org / arrc / fallbacks - contract - language. contract language can be found at 3 see board of governors of the federal reserve system ( 2019 ), dodd - frank act stress test 2019 : supervisory stress test methodology ( pdf ) ( washington : board of governors, march ), table 2, p. 23. 3 / 3 bis central bankers'speeches

randal k quarles : the next stage in the libor transition speech ( via prerecorded video ) by mr randal k quarles, vice chair for supervision of the board of governors of the federal reserve system, at the alternative reference rates committee roundtable, cohosted by the alternative reference rates committee and the new york university stern school of business and its salomon center for the study of financial institutions, new york city, 3 june 2019. * * * good morning to you all. i am sorry i cannot be present at the alternative reference rates committee ’ s ( arrc ) fourth roundtable, but i wanted to share these remarks with you at what is the start of the next critical stage in the transition away from libor. 1 since 2014, the official sector has publicly warned that libor could become unstable. not everyone paid attention to those warnings, but the risks that we pointed to have materialized. the u. k. financial conduct authority has intervened to preserve libor ’ s stability only through the end of 2021. despite that development, some continue to speculate that libor can remain in production indefinitely. my key message to you today is that you should take the warnings seriously. clarity on the exact timing and nature of the libor stop is still to come, but the regulator of libor has said that it is a matter of how libor will end rather than if it will end, and it is hard to see how one could be clearer than that. the federal reserve convened the arrc based on our concerns about the stability of libor. the arrc was charged with providing the market with the tools that would be needed for a transition from libor : an alternative rate that did not share the same structural instabilities that have led libor to this point, a plan to develop liquidity in the derivatives market for this new rate so that cash users could hedge their interest rate risk, and models of better contract language that helped limit the risk from a libor disruption. the arrc has provided these tools. now it is up to you to begin using them. with only two and a half years of further guaranteed stability for libor, the transition should begin happening in earnest. i believe that the arrc has chosen the most viable path forward and that most will benefit from following it, but regardless of how you choose to transition, beginning that transition now would be consistent with prudent risk management and the duty that you