( occ ), and federal deposit insurance corporation ( fdic ) sent a letter to the banking organizations we regulate noting that, after 2021, the use of libor in new transactions would pose safety and soundness risks. 6 accordingly, we encouraged supervised institutions to stop new use of libor as soon as is practicable and, in any event, by the end of this year. the letter also noted that new contracts entered into before december 31, 2021, should either use a reference rate other than libor or have robust fallback language that includes a clearly defined alternative reference rate after libor ’ s discontinuation. recently, a number of institutions have asked what would qualify as “ new ” use of libor after 2021. we are working with other agencies to provide additional guidance about this issue. in my view, however, “ new ” use of libor would include any agreement that creates additional libor 2 / 4 bis central bankers'speeches exposure for a supervised institution or extends the term of an existing libor contract. earlier this year, the federal reserve issued another supervisory letter that provided guidance concerning supervised institutions ’ libor transition plans. 7 as the end of libor approaches, federal reserve examiners have intensified their focus on supervised institutions ’ transition planning. in general, institutions of all sizes have acknowledged year - end as the stop date for new libor contracts and are operationally prepared to offer alternative rates. however, based on data from the second quarter of 2021, we estimate that large firms used alternative rates for less than 1 percent of floating rate corporate loans and 8 percent of derivatives. to be ready for year - end, lenders will have to pick up the pace, and our examiners expect to see supervised institutions accelerate their use of alternative rates. transitioning to alternative rates a handful of firms have said that they may want more time to evaluate potential alternative rates. there is no more time, and banks will not find libor available to use after year - end no matter how unhappy they may be with their options to replace it. i would note that the arrc has been publishing tools to facilitate the use of sofr for almost four years. 8 sofr is a broad measure of the cost of borrowing cash overnight, collateralized by treasury securities. it rests on one of the deepest and most liquid markets in the world. it is calculated transparently by the federal reserve bank of new york, engendering market confidence. and it can be used for

happened which together make clear that libor will no longer be available for any new contracts after the end of this year, just 86 days from now. first, the united kingdom ’ s financial conduct authority ( fca ), which regulates libor, and ice benchmark administration ( iba ), which administers 1 no u. s. dollar libor tenors will be available libor, announced definitive end dates for libor. after june 30, 2023. so, now there was a definitive and immovable date fixed for the end of libor. however, the second thing that happened made clear that long before that end date in 2023, libor would not be available for any new contracts after the end of this year. following the fca and iba announcements about the end of libor, the federal reserve and other regulators published guidance making clear that we will focus closely on whether supervised institutions stop new use of libor by the end of this year — 86 days from now. if libor will not be available for new contracts, what is the point of iba continuing to provide usd libor quotes until mid - 2023? those libor quotes will allow many existing contracts to mature according to their terms, thus greatly reducing the costs and risks of this transition. otherwise, many banks would have had to re - negotiate hundreds of thousands of loan contracts before december 31, an almost impossible task. but the whole process only works if no new libor contracts are written while the legacy contracts are allowed to mature. so, those new libor contracts will not be made. change is difficult, but it is inescapable. what is libor, and why is it going away? 1 / 4 bis central bankers'speeches libor was intended to be a measure of the average interest rate at which large banks can borrow in wholesale funding markets for different periods of time, ranging from overnight to one month, three months, and beyond. libor is an unsecured rate, which means that it measures interest rates for borrowings that are made without collateral and therefore include some credit risk. at first blush, it may seem peculiar that a borrowing rate for banks in london has been used so widely. why, for example, are more than $ 1 trillion of residential mortgages in the united states tied to libor? the answer is that, over time, libor ’ s pervasiveness became selfreinforcing. lenders, borrowers