As part of a global change, regulators, alongside industry bodies and various working groups of private-market participants have been discussing alternative benchmark rates to replace the IBORs. RFRs are being discussed for each LIBOR currency. The industry efforts in support of the transition to these rates are well underway, although there remains much to be done. These reforms will affect different IBORs in different ways. Some reforms relate to a change in methodology of how the interest rate benchmarks are calculated (for example, with respect to the reform in EONIA and EURIBOR in 2019). Other reforms are based on the movement away from certain benchmarks entirely (as with LIBOR).

LIBOR, the most widely used benchmark for short-term interest rates, is used in financial products denominated in a number of currencies and is published in GBP (British Pound), USD (US Dollar), EUR (Euro), JPY (Japanese Yen) and CHF (Swiss Franc). Certain currencies also use specific benchmarks such as, EURIBOR and EONIA for EUR, the Tokyo Interbank Offered Rate (TIBOR) for JPY, the Hong Kong Interbank Offered Rate (HIBOR) for Hong Kong Dollar and the Singapore Interbank Offered Rate (SIBOR) for Singapore Dollar amongst others.

In 2014, the Financial Stability Board (FSB) undertook a review of major interest rate benchmarks. The FSB established a high-level Official Sector Steering Group of regulators and central banks. Work by this group resulted in recommendations from the FSB to reform major interest rate benchmarks. [1] In particular, they recommended the identification and use of alternative benchmarks that are based on more active and liquid overnight lending markets to replace inter-bank offered rates (IBORs). These alternative benchmarks are being described by the market and industry as risk-free rates (RFRs).

Currency-specific working groups have identified preferred RFRs in respect of each currency for which LIBOR is currently published. RFRs are generally based on overnight deposit rates (and repurchase agreements [repos] in the U.S). RFRs also differ from LIBOR in a number of other important ways:

  • LIBOR is a term rate and so is set prior to the commencement of the interest period to which it relates. This allows a borrower future certainty as it will be able to calculate at the outset of the interest period the amount of interest which will be payable. Most RFRs are backwards looking and are published the day after the period to which they relate meaning the borrower may only know shortly before or on the interest payment date how much interest it owes.
  • The calculation of LIBOR includes a premium for bank credit risk for the relevant tenor. RFRs do not include the same premium and therefore the interest rate payable may be different.
  • LIBOR is administered in London and published on or about 11 am London time for a number of different currencies. Risk-free rates are each administered locally in each currency jurisdiction and published at different times.

For more information on CHF LIBOR, EONIA, EURIBOR, EUR LIBOR, HBOR, JPY LIBOR, TIBOR, SIBOR, SOR, and USD LIBOR please refer to our table.

Read our Frequently Asked Questions on Navigating the IBOR Transitions:

Navigating the GBP LIBOR Transition - Frequently Asked Questions

Navigating the US$ LIBOR Transition - Frequently Asked Questions

About the 2020 IBOR Fallbacks Protocol - Frequently Asked Questions

What is "fallback language" in the context of the benchmark reform?

In EMEA, following the implementation of the EU Benchmark Regulation (BMR), all new contracts referencing a benchmark should provide fallbacks which are contractual provisions that determine the reference rate or provide a means to determine a replacement rate if the relevant benchmark becomes unavailable or is deemed unrepresentative. Legacy contracts, to the extent possible, should also be amended to incorporate adequate and robust fallback language.

ISDA IBOR Fallbacks Protocol

The International Swaps and Derivatives Association (ISDA) recently published the ISDA IBOR Fallbacks Protocol as a way for parties to efficiently and electronically amend, with their adhering counterparties, specific master agreements and transaction confirmations by incorporating the new fallbacks (replacement benchmarks). In addition, the IBOR Fallbacks Supplement to the 2006 ISDA Definitions has also been published.

On the effective date, 25 January 2021, all new derivatives contracts that incorporate the 2006 ISDA Definitions and reference one of the covered IBORs will contain the new fallbacks. Derivatives contracts already existing as of this date will incorporate the new fallbacks if both counterparties have adhered to the ISDA IBOR Fallbacks Protocol or otherwise bilaterally agreed to include the new fallbacks in their contracts. The ISDA IBOR Fallbacks Protocol will remain open for adherence after 25 January 2021.

In support of MUFG's comprehensive LIBOR Transition Strategy, MUFG Securities EMEA plc; MUFG Securities (Europe) N.V.; and MUFG Bank, ltd, has adhered to the ISDA IBOR Fallbacks Protocol, and we encourage you to consider whether the ISDA IBOR Fallbacks Protocol may be part of an appropriate solution for you.

For further information, please read our Frequently Asked Questions on the ISDA IBOR Fallbacks Protocol.

What are our plans?

MUFG has implemented an IBOR Governance and Implementation programme, working with regulators, the industry and our clients to manage the impact assessment and successful transition through the IBOR reform market change. We are committed to working in partnership with our clients to support them through the reform process, recognising that this will be a complex and time consuming exercise. We encourage you to keep up to date with the latest industry developments in relation to IBOR reform and to consider its impact on your own business.

Contact Us

If you would like any further information or have any questions, please do not hesitate to email us at


MUFG Securities

MUFG Bank (Europe) N.V.

Useful Links

For further background information, the following websites contain useful information:

This page and its related content are not intended to be, and should not be relied upon as, legal, financial, tax, accounting or other advice. We are not providing you with any such advice and you should consult your own advisors for advice on the reform of interest rate benchmarks and the related risks. We make no representation and provide no warranty as to the information set out in herein, which is based on information from third parties, and you should not rely on any such information as constituting a representation or warranty. The content herein is not intended to be comprehensive and was last updated on 22 April 2020. Material developments may have occurred since this last update. This page and its related content do not consider risks to you from interest rate reform and there may be other issues that are not highlighted below. Without limiting the foregoing, this page and its related content do not address issues specific to any particular sector or business. We are not acting as your fiduciary or adviser and the provision of this information to you will not give rise to any duty of care. We assume no responsibility for any use to which these this information may be put. The areas covered herein are continually evolving and you should consult the relevant sources. Links to some of the relevant working and industry groups are at the end of this document.