On July 19, 2022, the Federal Reserve Board invited comment on a proposal that provides default rules for certain contracts that use the LIBOR reference rate, which will be discontinued in 2023. The proposal implements the Adjustable Interest Rate (LIBOR) Act, which Congress enacted earlier this year.
The proposal would replace references to LIBOR in certain contracts with the Board-selected replacement rate after June 30, 2023. The contracts include those governed by domestic law that do not mature before LIBOR ends and that lack adequate fallback provisions. As part of the proposal, separate replacement rates are identified for derivatives transactions, contracts involving government-sponsored enterprises, and all other contracts.
Comments on the proposal will be accepted for 30 days after publication in the Federal Register.
The Federal Reserve’s press release can be found here.
The proposed rule can be found here.
