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Scrapping LIBOR is the sort of idea that’s much easier in theory than in practice — replacing the long-standing financial benchmark poses an array of risks and challenges — in a new report, global policymakers propose a set of recommendations to help ease the transition.

The planned move away from LIBOR as the financial world’s pre-eminent financial benchmark by the end of 2021 “requires significant commitment and sustained effort from both financial and non-financial institutions,” said the report from the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision.

Yet, according to thee report, surveys by global banking and insurance regulators (which were conducted before the Covid-19 outbreak emerged), found that many financial institutions have yet to start their transition away from LIBOR or are still in the planning stages.

While the global pandemic has delayed many financial sector reform efforts, the FSB has maintained that carrying on with benchmark transition by the end of 2021 remains a priority.

“The FSB has recognised that some aspects of firms’ transition plans are likely to be temporarily disrupted or delayed by Covid-19, but also noted that Covid-19 has highlighted that the underlying markets LIBOR seeks to measure are no longer sufficiently active,” the report said.

It also stressed that failing to transition to alternative rates represents a potential global financial stability risk.

Today’s report sets out recommendations for authorities “to support financial institutions’ and their clients’… in transitioning away from LIBOR.”

Those recommendations call on regulators and standard setters to engage with the industry to identify transition risks and challenges, to adopt formal transition strategies and to promote greater industry-wide and cross-border coordination.

To that end, the FSB said that it will work with other international bodies and standard setters to design a simple set of key metrics to track global LIBOR exposures and transition status, while also monitoring the impact of Covid-19 on the benchmark transition process.