First, the fate of LIBOR.
We know that LIBOR (London Interbank Offered Rate) is the most widely used international benchmark interest rate in the international financial market, and the foreign currency business carried out by Chinese banks is also priced by LIBOR.
Since the international financial crisis in 2008, the interbank lending market in various countries has shrunk, and the reference base of LIBOR quotation has weakened. Moreover, the scandal of LIBOR quotation being manipulated for a long time has seriously weakened LIBOR's market credibility. The LIBOR pricing mechanism is that 20 large banks submit their estimated loan interest rates to the British Bankers Association every morning 1 1 London time, and then remove the arithmetic average of the highest and lowest interest rates 1/4 of the total number of quoted banks, that is, the LIBOR interest rate of the day, and then apply this interest rate to the pricing of various loans, derivatives and other financial instruments. The inherent defects of this quotation mechanism are easily manipulated by huge profits.
Under such circumstances, the British Financial Conduct Authority (FCA) announced in 20 17 that after the end of 20021,it would no longer be mandatory for the quoting banks to quote LIBOR, which also indicated that LIBOR was about to enter history.
Second, coping strategies.
Because LIBOR has long been notorious, major economies in the world promoted the benchmark interest rate reform several years ago, and selected benchmark interest rates that can replace LIBOR, mostly risk-free benchmark interest rates (RFRs), that is, actual transaction interest rates, which are managed by central banks of various countries.
For us, the same problem exists. Some foreign currency businesses based on LIBOR pricing carried out by some domestic banks also face the problem of benchmark interest rate substitution conversion. The construction of China's benchmark interest rate system started late, but it came from behind. After more than 20 years of continuous cultivation, China's benchmark interest rate system has made important progress, and the money market, bond market and credit market have basically cultivated their own index interest rates.
DR (bond repurchase rate), bond yield and LPR in deposit financial institutions have all played an important role as benchmarks in the corresponding financial markets, providing a good reference for observing the market operation and guiding the pricing of financial products.
Third, the practice of interest rate system reform in China
Repurchase is the main transaction in China's money market, among which pledged repo among banks accounts for the highest proportion. At present, China has formed an interest rate index system based on inter-bank pledged repo transactions, which mainly includes key interest rate indicators such as R, DR, FR and FDR. At the same time, interbank lending market interest rates: CHIBOR, SHIBOR, LPR, etc. It is also widely used.
Pledged repo rate
Since 1997, a unified national inter-bank bond market was established, pledged repo transactions began to be concentrated in the trading center.