Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla revealed plans on Wednesday to introduce an overnight (ON) rate as a replacement for the expiring London Interbank Offered Rate (LIBOR) by June 30.
Medalla emphasized the urgent requirement for a credible yield curve by January next year and highlighted the necessity of market cooperation in implementing these changes.
The BSP aims to have a reliable yield curve in place by January 2024.
Additionally, the introduction of a 56-day tenor and the generation of the ON rate based on the 28-day BSP bill rate were also discussed and agreed upon by the market.
The ON reference rate will be effective on or before June 30 to meet the global deadline for the cessation of LIBOR.
Medalla emphasized the importance of a credible yield curve for informed macro-financial decisions and outlined the BSP’s criteria for its establishment, including active trading, varied tenor yields, usability, and replicability.
