WASHINGTON — Breaking up is hard to do. Breaking up with an interest rate that is baked into millions of contracts worth trillions of dollars is even harder, but 2022 was the year the financial system proved that it can be done.
Libor, or the London interbank offered rate, evolved out of the rampant inflationary cycle of the 1980s as a way for complex financial contracts to hedge against rising or falling interest rates. The benchmark was based on unsecured overnight loans that banks would make to other banks to meet liquidity needs and came to represent banks' fundamental cost of funds all over the world.
But in 2012 it
What follows is a review of the decade between when the Libor scandal first broke and the sunsetting of the last Libor rates next year.