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The “Arab Monetary” issues guidelines for the abandonment of reference interest rates DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

The “Arab Monetary” issues guidelines for the abandonment of reference interest rates

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The “Arab Monetary” issues guidelines for the abandonment of reference interest rates Empty The “Arab Monetary” issues guidelines for the abandonment of reference interest rates

Post by claud39 on Fri Sep 11, 2020 11:23 am

The “Arab Monetary” issues guidelines for the abandonment of reference interest rates



11/09/2020



The “Arab Monetary” issues guidelines for the abandonment of reference interest rates %D8%A7%D9%84%D9%86%D9%82%D8%AF-%D8%A7%D9%84%D8%B9%D8%B1%D8%A8%D9%8A-%D9%8A%D8%B5%D8%AF%D8%B1-%D8%A7%D9%84%D9%85%D8%A8%D8%A7%D8%AF%D8%A6-%D8%A7%D9%84%D8%A5%D8%B1%D8%B4%D8%A7%D8%AF%D9%8A%D8%A9-%D9%84%D9%84%D8%AA%D8%AE%D9%84%D9%8A-%D8%B9%D9%86-%D8%A3%D8%B3%D8%B9%D8%A7%D8%B1-%D8%A7%D9%84%D9%81%D8%A7%D8%A6%D8%AF%D8%A9-%D8%A7%D9%84%D9%85%D8%B1%D8%AC%D8%B9%D9%8A%D8%A9








The Arab Monetary Fund has issued “General Guidelines on How to Abandon Reference Interest Rates LIBOR and EIBORS to Enhance Financial Stability” with the aim of enhancing financial stability in the Arab region in light of the international community’s tendency to abandon the reference interest rates “Libor”.




Dr. Abd al-Rahman bin Abdullah Al-Hamidi, Director General of the Chairman of the Board of Directors of the Arab Monetary Fund, said that issuing general guidelines on how to abandon the reference interest rates “Libor” and “Ipors” would enhance financial stability, thus contributing to early preparation and preparation to address the resulting effects. Abandoning these reference prices, and ensuring the safety and stability of the financial sector, which is considered one of the priorities of central banks and Arab monetary institutions.


The guiding principles included a set of recommendations related to limiting the impact of abandoning the reference prices “Libor” and “Ipors”, as they emphasized the importance of forming a temporary mini-committee within the central bank to study the size of the exposure of the Central Bank and the financial sector to “LIBOR” and “IBORS” rates. A plan to abandon dealing with them so that the committee will work to submit periodic reports to the management of the Central Bank or the Financial Stability Committee or both, until the end of its work.


The guiding principles also emphasized the need to strengthen consultation and dialogue with the unions of banks and commercial banks, to find a suitable alternative to the reference pricing tools “Ipors”, including how to qualify the banking systems to make the transition from Ipors to another reference tool, with the need to allocate sufficient resources to support the transition efforts.


The principles recommended the importance of central banks continuing to develop the operational framework for the central bank's monetary policy, so that the ability of the central bank to influence the interest rates of interbank lending is strengthened through the corridor system.


The guiding principles emphasized the necessity of reviewing the instructions for financial consumer protection and finding appropriate legal solutions regarding bank clients linked to their existing credit contracts, with reference interest rates linked to LIBOR or Iporse, and encouraging negotiation between banks and clients to search for mutually satisfactory legal solutions regarding contract amendment.


The principles also addressed the need to enhance the awareness of banks regarding the amendment of information technology systems related to variable interest pricing, in line with any new instructions or instructions issued by the Central Bank in this regard. In addition to urging them to study the size of exposure to LIBOR and EIBORS, and to assess the size of the risks that may result from abandoning these prices, and its impact on its business model.


The principles indicated the importance of central banks encouraging commercial banks to form a temporary committee, to develop a plan to give up the rates of “Libor” and “Ipors”, so that the committee includes directors of risk management, treasury, compliance, financial, information technology, internal auditing, banking operations and financial and legal consumer protection. The committee shall submit monthly reports to the bank’s board of directors on the progress of achievement.


The principles also dealt with many aspects of interest to issues of enhancing financial stability, such as intensifying field inspection rounds on commercial banks, to ensure the extent of the readiness of commercial banks in terms of abandoning dealing with “Libor” and “Ipors” prices and the exchange of expertise, experiences and information between central banks and financial institutions. Regional and international plans to abandon “LIBOR” and “Iporos”, holding conferences, workshops and training programs in this regard, and continuous assessment of financial, legal, operational and accounting risks and reputational risks that may arise in the transition period from relying on “LIBOR” and “Iboros” to Reliance on a new pricing tool.








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The “Arab Monetary” issues guidelines for the abandonment of reference interest rates Empty LIBOR and variants

Post by claud39 on Fri Sep 11, 2020 11:24 am

LIBOR and variants




Interbank rates are quoted bid (to borrow) and offer (to lend). The London interbank offered rate (LIBOR) is a benchmark. The interest rates on many credit agreements worldwide are set in relation to it; for example, as LIBOR plus 0.5%. Most major financial centres have LIBOR equivalents, such as AIBOR, FIBOR and PIBOR in Amsterdam, Frankfurt and Paris.


There is no direct equivalent in the US. Its interbank market is the Federal funds market, while the base for loan contracts is the prime rate (the rate charged to borrowers with prime or excellent creditworthiness). However, whereas LIBOR changes constantly under the direct influence of supply and demand, the prime rate is set by the banks (with reference to market rates) and is changed less regularly.




http://countrydata.bvdep.com/EIU/Help/liborandvariants.htm
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The “Arab Monetary” issues guidelines for the abandonment of reference interest rates Empty Interbank offered rate

Post by claud39 on Fri Sep 11, 2020 11:26 am

Interbank offered rate









IBOR is the generic acronym for Interbank Offered Rate , or interbank offered rate , i.e. the rate at which a first-class bank , at a given time and for a given maturity, lends to another first-class bank in blank (in English: unsecured lending ), that is to say without the loan being secured by any asset whatsoever, such as negotiable debt securities or securities.








[ltr]

Summary

[/ltr]




The interbank lending "blank" edit modify the code ]


The blank loan is at the same time the most risky operation, the most framed by internal banking regulations and the most expensive (in use of capital or in weight in certain prudential ratios) of the money market , it is therefore the one of the least frequent and the least important in total amount. In addition, blank transactions tend to be done for short maturities, which consumes less credit lines and capital. They also tend to avoid crossing a balance sheet date, such as in particular theDecember 31st.

However, paradoxically, it is on this small market that a good part of the immense market for financial derivatives is based .









https://fr.wikipedia.org/wiki/Interbank_offered_rate#Autres_indices_IBOR
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The “Arab Monetary” issues guidelines for the abandonment of reference interest rates Empty THE ARAB MONETARY FUND ISSUES "GENERAL GUIDELINES ON HOW TO ABANDON REFERENCE INTEREST RATES LIBOR AND EIBORS TO ENHANCE FINANCIAL STABILITY."

Post by claud39 on Fri Sep 11, 2020 11:30 am

THE ARAB MONETARY FUND ISSUES "GENERAL GUIDELINES ON HOW TO ABANDON REFERENCE INTEREST RATES LIBOR AND EIBORS TO ENHANCE FINANCIAL STABILITY."


2020-09-11



The “Arab Monetary” issues guidelines for the abandonment of reference interest rates Logo-ar






Arab Monetary Fund issues

"General guidelines on how to abandon reference interest rates LIBOR and EIBORS to enhance financial stability."




The guiding principles include many aspects that concern issues of enhancing financial stability, most notably:





  • Developing a plan to reduce the risks of abandoning LIBOR and EIBOR by central banks

  • Study the size of financial sector exposures to LIBOR and EIBORS

  •  Promote consultation and dialogue with unions of banks and commercial banks to find a suitable alternative to the reference pricing tools of Ipors.

  • Continue to develop the operational framework for the central bank's monetary policy

  • Reviewing the instructions for financial consumer protection

  •  Enhancing the role of the boards of directors of commercial banks by adopting a strategy or plan to abandon dealing in LIBOR and EIBORS

  • Ongoing evaluation of financial, legal, operational, accounting and reputational risks arising from relinquishing LIBOR and EIBOR






Within the framework of the Arab Monetary Fund’s keenness to provide support and technical advice to its member states in the field of economic, financial and monetary reforms with the aim of enhancing financial stability in the Arab region, and in light of the international community’s tendency to abandon the reference interest rates “Libor”, the Fund has issued “general guidelines on how Abandoning the benchmark interest rates LIBOR and EIBOR to enhance financial stability. "



It should be noted that the Financial Stability Board and the Basel Committee on Banking Supervision submitted on July 9, 2020 a report to the Group of Twenty, regarding the transition risks arising from the abandonment of the reference interest rate, "LIBOR." This comes within the framework of the international financial institutions' efforts to consolidate global financial stability. According to this report, by the end of 2021, it is planned to abandon the benchmark interest rate, "LIBOR", by which the pricing is set in the London Stock Exchange. Hence, banks and money markets should get rid of linking loans and financial transactions to Libor. In the same context, the Financial Stability Board stressed the importance of continuing efforts related to reducing reliance on reference rates for interbank lending interest rates before the end of 2021.



The guiding principles included a set of recommendations related to limiting the impact of abandoning the reference prices "LIBOR" and "AIBOR", as they emphasized the importance of forming a temporary mini-committee within the Central Bank to study the size of the exposure of the Central Bank and the financial sector to "LIBOR" and "IBORCE" rates, as well as Developing a plan to abandon dealing with them, so that the committee shall work to submit periodic reports to the Central Bank management or the Financial Stability Committee or both, until the end of its work.



On the other hand, the guiding principles emphasized the need to strengthen consultation and dialogue with unions of banks and commercial banks, in order to find a suitable alternative to reference pricing tools (IBORs), including how to qualify the banking systems to make the transition from IBOR to another reference tool, with the need to allocate sufficient resources to support Transition efforts.



The principles also recommended the importance of central banks continuing to develop the operational framework for the monetary policy of the central bank, so that the ability of the central bank to influence the interest rates of interbank lending is enhanced through the corridor system.



On the other hand, the guiding principles emphasized the need to review the instructions for financial consumer protection, find appropriate legal solutions regarding bank clients linked to their existing credit contracts, with reference interest rates linked to LIBOR or Iporse, and encourage negotiation between banks and customers to search for mutually satisfactory legal solutions regarding contract modification. .



In this context, the principles also touched upon the need to enhance the awareness of banks regarding the amendment of information technology systems related to variable interest pricing, in line with any new instructions or instructions issued by the Central Bank in this regard. In addition to urging them to study the size of exposure to LIBOR and EIBORS, and to assess the size of the risks that may result from abandoning these prices, and the impact of that on their business model.



On the other hand, the principles indicated the importance of central banks encouraging commercial banks to form a temporary committee, to devise a plan to waive "LIBOR" and "Iporse" rates, whereby the committee includes directors of risk management, treasury, compliance, finance, information technology, and auditing departments. Domestic, banking, financial, and legal consumer protection. The committee shall submit monthly reports to the bank’s board of directors on the progress of achievement. The principles also dealt with many aspects of concern to issues of enhancing financial stability, such as intensifying field inspection rounds on commercial banks, to ensure the extent of the readiness of commercial banks in terms of abandoning dealing with “Libor” and “Ipors” prices, and exchanging expertise, experiences and information between central banks and institutions. Regional and International Finance on plans to abandon "LIBOR" and "IBORCE"



In this context, His Excellency Dr. Abd al-Rahman bin Abdullah Al-Hamidi, Director General and Chairman of the Board of Directors of the Arab Monetary Fund, expressed his pleasure to issue general guidelines on how to abandon the reference interest rates “Libor” and “Ipors” to enhance financial stability, in a way that contributes to preparation and readiness. To deal with the early effects of abandoning these reference prices, in order to ensure the safety and stability of the financial sector, which is considered one of the priorities of central banks and Arab monetary institutions, given the close relationship of financial stability with economic and social stability in countries.



To view the "general guidelines on how to abandon reference interest rates, LIBOR and EIBORS to enhance financial stability", please view the website of the Arab Monetary Fund at the following two links in Arabic and English:

In the arabic language:

https://www.amf.org.ae/en/content/GGILIBOR-IBOR-Ar

In English:

https://www.amf.org.ae/en/content/GGILIBOR-IBOR-En







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