The London Interbank Offer Rate, commonly known as Libor, has been called “the world’s most important number.” It is the basis for calculating interest rates on everything from mortgages to student loans to government bonds; an estimated $200 trillion worth of contracts is riding upon it.
Next year will be its last.
Libor is being phased out at the end of 2021, and there is no universal agreement on what will replace it. When it does get swapped out — and different metrics could be used in different instances — the interest rate to be paid on any given loan could be higher or lower than lenders and borrowers anticipated when they signed their deals.
The potential for chaos and uncertainty around the change has some experts…