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Despite the disruption inflicted by the Covid-19 outbreak on the financial industry, firms should still be working toward a shift away from the London Inter-bank Offered Rate (LIBOR) to new financial benchmarks by the end of 2021, says the Basel, Switzerland-based Financial Stability Board (FSB).

In a statement issued on July 2, the FSB said it acknowledges that some aspects of firms’ transition plans “are likely to be temporarily disrupted or delayed,” but other preparations can continue.

Further, it maintained that firms should continue the shift to other benchmarks, with the goal of ending their reliance on LIBOR by the end of next year.

“LIBOR transition remains an essential task that will strengthen the global financial system,” the FSB said.

“Covid-19 has highlighted that the underlying markets LIBOR seeks to measure are no longer sufficiently active,” it added. “Moreover, these markets are not the main markets that banks rely upon for funding.”

The FSB also noted that, for firms that use LIBOR-based financing, increases in LIBOR rates in March largely offset the efforts of central banks to reduce rates in the face of the pandemic.

While policy-makers are coordinating changes to short-term transition deadlines due to the pandemic, the FSB said, financial firms and other firms “should continue to ensure that their transition programs enable them to [make the] transition to LIBOR alternatives before end-2021.”

Later this month, the FSB will publish a report detailing the remaining challenges to moving away from LIBOR, and how it recommends addressing them.