( 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

fiscal positions that were quite vulnerable to a shock to confidence for some time now. high debt levels were sustainable while markets thought they were and hence were prepared to offer financing at low interest rates ; if people suddenly doubt sustainability and charge high interest rates, that same position becomes much less sustainable. so to no small extent, it is actually a matter of confidence – confidence that there is a sustainable long - run fiscal path, that policymakers know how to get onto it, and that they have the will to do so. in crafting any policy response to near - term economic weakness, this is a key point. second, there have been pressures in funding markets for some european banks recently, but at this point not to the same extent as in october 2008. bank capital levels are improved from three years ago and leverage is reduced. we have not seen significant funding problems for us or uk banks recently ; their problems at present seem to relate more to the possible size of legal costs arising from pre - crisis lending standards. overall, we have not, to this point, seen the widespread withdrawal of willingness to deal with counterparties that we saw in late 2008. third, a key feature of this episode is that confidence in the euro is a more prominent issue than was the case three years ago. those countries at the so - called periphery ’ are paying a high price as they play their part in keeping the euro together. but the ultimate outcome is going to hinge on the willingness of “ core ” euro countries to accept socialisation across the euro zone of some of the losses associated with countries in trouble. that is really the issue that is being debated in europe now. if there were a major international downturn, an important question would be how policymakers in major countries would respond. the scope for fiscal policy easing in many major countries is hotly debated. some commentators call for further stimulus, citing faltering recoveries, while others point to medium - term debt paths that look very troubling as a reason for fiscal consolidation. both have a point. the question in major countries is whether a package combining short - term stimulus with a highly credible medium - term path back to sustainability could be crafted. it certainly does not look easy. as for possible monetary policy responses, most major countries would be quickly into the realm of “ quantitative methods ”, if they are not there already. it is hard to gauge the effects of those measures. in asia and other parts of the emerging world, however, ample