25 January 2019 FT — Articles to Read

25 January 2018


Question: How many Libors are published daily?


Millionaire Ross tells unpaid federal workers using food banks to get loans – Pg. 1

–        The Capital Area Food Bank, which serves the Washington area, said it expected to serve 600,000 more meals this month than in a normal January  because of the shutdown’s impact on government employees

–        (Prof Note: This truly bothers me.  Trump signed the bill providing back pay.  Yes, easy for me to say, but, “Budget!”.  The private sector employees, including me, live with risk of loss of income every day.  We live with loss of income WITHOUT back pay certainty!)


Workers in ‘Trump country’ most at risk from automation – Pg. 3

–        …25% of US employment, or 36m jobs, will face a “high” exposure to automation because of the nature of the tasks involved

–        “Heartland” states including Indiana , Kentucky and Iowa with significant manufacturing or agricultural sectors could see some of the biggest changes

–        Major population centres with high levels of educational attainment – including Washington DC, San Jose in Califorinia, New York and Durham-Chapel Hill in North Carolina – are better placed to weather the storm


Intercontinental Exchange working on interest rate benchmark to replace Libor – Pg. 19

–        ICE, which also administers the existing London interbank offered rate, is exploring launching a new rate aimed at cash markets such as loans, ….

–        It has been supported by 13 out of the 16 banks that supply daily submissions for Libor

–        The exchange’s move is an attempt to resolve a stand-off between markets and global regulators over a transition away from Libor, which authorities want to happen by the end of 2021

–        Watchdogs are concerned that Libor is not based on real market transactions.  But the benchmark has become so pervasive that it is still central to thousands of derivatives, bonds, credit cards, and loan contracts, with a notional value of around $370tn.  Around $200tn of deals are dollar-based loans and derivatives

–        Regulators would prefer banks and investors to use alternative rates that reflect liquid and active markets, but take-up has been slow, in part because the alternatives are usually based on overnight rates

–        Critics argue they do not sufficiently replicate Libor over a longer period and they are a particular problem for the loan market.  Libor measures the cost of unsecured borrowing between banks for a specific period, usually over one, three and six months


Answer: 35 (5 currencies; 7 maturities)