The Financial Stability Board (“FSB”) has published a progress report on implementation of the FSB's 2014 recommendations to reform major interest rate benchmarks such as key interbank offered rates (“IBORs”).

The FSB noted in a statement that its 2014 recommendations included measures to strengthen benchmarks and other potential reference rates based on interbank markets, as well as developing alternative nearly risk-free benchmark rates (“RFRs”). The FSB said that its recommendations were made following examples of attempted market manipulation and false reporting of global reference rates, together with the post-crisis decline in liquidity in interbank unsecured funding markets.

The FSB progress report concluded that IBOR administrators have continued to take important steps to implement the FSB's recommendations, including steps to adjust methodologies used to calculate benchmark rates. However, in the case of some IBORs, such as LIBOR and EURIBOR, underlying reference transactions in some currency-tenor combinations are scarce and submissions therefore necessarily remain based on a mixture of factors including transactions and judgement by submitters. Regulators have taken a number of steps to address these issues, including developing powers to require mandatory contributions to benchmarks, but it remains challenging to ensure the integrity and robustness of benchmarks and it is uncertain whether submitting banks will continue to make submissions over the medium to long term, the report said.