LIBOR FRB FAQ 6 – Should Board-supervised institutions include fallback language in LIBOR contracts entered into on or before December 31, 2021?

Compliance > Regulation Z - TILA > LIBOR Transition
Q:  Should Board-supervised institutions include fallback language in LIBOR contracts entered into on or before December 31, 2021?
 
A:   As stated in SR Letter 21-17, LIBOR contracts entered into on or before December 31, 2021, should either use a reference rate other than LIBOR or have fallback language that provides for use of a strong and clearly defined alternative reference rate after LIBOR's discontinuation. Such fallback language will ensure there are no disagreements between the parties to a LIBOR contract about how to calculate interest when LIBOR is no longer available.

 
This Q&A was created based on information from the Federal Reserve’s website (which may be updated from time to time) that provides Answers to Frequently Asked Questions on the Transition Away from LIBOR.  This information may be found here:  https://www.federalreserve.gov/supervisionreg/srletters/SR2112a2.pdf
 

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