The international community must agree on an alternative to Libor before its expiring by the end of 2021, said International Cooperation Minister Rania Al Mashat during the World Bank's annual meeting yesterday, according to a ministry statement. Speaking during a virtual session on the transition from Libor, Al Mashat called on global financial chiefs to settle on a replacement benchmark to avoid disruption when the rate officially expires at the end of next year. Al Mashat joined the high level discussion organized by the World Bank Group in the 2020 Annual Meetings, entitled "Beyond Libor … Are we prepared?" which included potential global risks as interest rate "Libor" is expected to be discontinued during 2020 and 2021, and how to come up with alternatives and ensure a smooth transition. During the World Bank 2020 Annual Meetings, She noted to the importance for the international community and financing institutions to agree on a new reference interest rate within a multilateral framework, in a way that benefits lenders and borrowers. What is Libor? Standing for the London interbank offered rate, Libor is the benchmark interest rate for interbank borrowing, and determines borrowing rates for public and private loans, bonds, credit cards and derivatives around the world. It is often referred to as the "world's most important number" because of the sheer volume of financial instruments that are based on it, with some putting the figure at USD 350 tn. Put simply, it's a huge financial shift that could cause chaos if the rates on these debts are not readjusted in an orderly way. The minister warned that the transition to the post-Libor world could disrupt debt payments by governments and the private sector, and urged international institutions to work with the World Bank to agree on how debts will be recalculated before the end of next year. She also called for the terms on existing contracts to be amended and for policymakers to take steps to mitigate the potential risks
