Japanese

Preparation for permanent cessation of LIBOR

All settings of London Interbank Offered Rate (LIBOR) based on the methodology referencing rates provided by panel banks (panel-based LIBOR) have ceased to be published, with the cessation of some USD LIBOR tenors at end-June 2023.

While LIBOR was mainly referenced in derivative contracts such as interest rate swaps, it was also quoted in a significant number of cash products including corporate loans and bonds. There was the possibility of disruption to users if LIBOR was ceased without sufficient preparation. Therefore, through close cooperation with the Bank of Japan (BOJ) and other relevant institutions, the Financial Services Agency (FSA) has supported market-led initiatives by providing related materials on its website and conducting surveys on the use of LIBOR so that market participants, including financial institutions, non-financial corporates, and institutional investors, can deeply understand the necessity of taking actions for a smooth transition away from LIBOR.

The FSA, together with the BOJ, conducted five surveys on the use of LIBOR, and it has been confirmed that the transition away from LIBOR is almost completed, as a result of market-led initiatives.

Note: Synthetic LIBOR calculated using market data for certain tenors of GBP LIBOR (3-month) and USD LIBOR (1-, 3-, and 6-month), which is limited to use for existing contracts that cannot feasibly be transitioned (i.e., so-called tough legacy contracts), has been released. Please refer to the following link for further details on the timing of cessation of publications by currency and tenor, and the announcement status of synthetic LIBOR etc.

Summary of the cessation of LIBOR publication

－ Information will be updated accordingly －

LIBOR Transition based on the Final Report on the Results of the Public Consultation on the Treatment of Tough Legacy Contracts in Japan published by the Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks

In Japan, the Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks has discussed the way to use synthetic yen LIBOR on the assumption that it will be published, and published the Final Report on the Results of the Public Consultation on the Treatment of Tough Legacy Contracts in Japan on November 19, 2021.
 
In consideration of the above report, the Financial Services Agency (FSA) and Bank of Japan (BOJ) have sent a joint letter to financial institutions through relevant associations.

LIBOR Transition based on the Final Report on the Results of the Public Consultation on the Treatment of Tough Legacy Contracts in Japan published by the Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks (JFSA and BOJ) -  November 25, 2021

Response to the announcement on the end date of LIBOR panel publication and the announcement on the intention to consult on the publication of synthetic yen LIBOR

On March 5, 2021, ICE Benchmark Administration (IBA) has announced that it intends to cease the publication of LIBOR based on the current methodology referencing rates provided by panel banks (panel-based LIBOR) immediately after end-2021 except for certain US dollar LIBOR settings. In addition, the UK Financial Conduct Authority (FCA) has announced on the same day that it will consult on the use of the proposed powers under the UK Financial Services Bill to require IBA to publish the 1-month, 3-month and 6-month JPY LIBOR settings on a synthetic basis (synthetic LIBOR) for one additional year after end-2021.
 
In consideration of the above announcements,  the Financial Services Agency (FSA) and Bank of Japan (BOJ) have sent a joint letter to financial institutions through relevant trade associations, which presents the expectation of the FSA and BOJ on transition away from panel-based LIBOR and on synthetic yen LIBOR.

Response to the announcement on the end date of LIBOR panel publication and the announcement on the intention to consult on the publication of synthetic yen LIBOR (JFSA and Bank of Japan) - March 8, 2021 (Updated: March 16, 2021)

Letters to the CEOs of Major Financial Institutions regarding LIBOR Transition

Financial Services Agency of Japan, together with the Bank of Japan, has written to the CEOs of major financial institutions regarding LIBOR transition. The purpose of sending the letters is to urge financial institutions to take actions for permanent cessation of LIBOR and to request submission of relevant materials to review the progress of preparedness in individual firms.
As mentioned above, the letters have been sent to some financial institutions. However, we will monitor preparedness of other financial institutions based on the contents of the letters.
Any financial institutions using LIBOR are expected to accelerate their actions by responsible and active involvement of management officials with due consideration for description of the letters.

“Taking Actions for Permanent Cessation of LIBOR” (JFSA and Bank of Japan) – June 1, 2020
 

Joint Survey on the Use of LIBOR (JFSA and Bank of Japan)

The JFSA, together with the Bank of Japan, conducted a joint survey of financial institutions, including banks, securities companies, and insurance companies, regarding their use of LIBOR.
The main aim of this survey is to ascertain their quantitative LIBOR exposures in preparation for the permanent cessation of LIBOR.

Key Results of the Survey on the Use of LIBOR (JFSA and Bank of Japan) - September 29, 2023
Key Results of the Survey on the Use of LIBOR (JFSA and Bank of Japan) - March 24, 2023
Key Results of the Survey on the Use of LIBOR (JFSA and Bank of Japan) - March 31, 2022
Key Results of the Survey on the Use of LIBOR (JFSA and Bank of Japan) - May 19, 2021
Summary of Survey Results on the Use of LIBOR and Main Actions Needed  (JFSA and Bank of Japan)
- March 13, 2020
 

Brief Survey on the Use of JPY LIBOR (JFSA and Bank of Japan)

The JFSA, together with the Bank of Japan, conducted a brief survey on the use of JPY LIBOR.
This is a brief survey conducted on a smaller number of financial institutions focusing on fewer survey items than the previous surveys on the use of LIBOR, in order to swiftly grasp the number of financial products and transactions referencing JPY LIBOR, as well as the progress with the transition away from JPY LIBOR as of end-September 2021.
Through this survey, it is expected that preparations for the smooth transition are promoted further at each financial institution.

Key Results of the Brief Survey on the Use of JPY LIBOR (JFSA and Bank of Japan) - November 1, 2021
 

Information from JFSA

Speeches

“Preparation for permanent cessation of LIBOR”, JFSA, Bank of Japan and Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks (available in Japanese) - December 22, 2020, At the 75th meeting of Finance Committee, Japan Foreign Trade Council, Inc., Tokyo

Keynote Speech, ISHIMURA Kozo, Director of the Risk Analysis Division, Strategy Development and Management Bureau (available in Japanese) - September 18, 2020, At ISDA Virtual Conferences "Bencmark Strategies Forum Japan", Tokyo

Keynote Speech, HORIMOTO Yoshio, Deputy Director-General of the Strategy Development and Management Bureau (available in Japanese) - September 8, 2020, At QUICK Forum "What will become of the post-LIBOR world" , Tokyo

“Preparation for permanent cessation of LIBOR”, NAKAJIMA Junichi, Director-General of the Strategy Development and Management Bureau (available in Japanese) - September 1, 2020, At the Sub-Committee on Capital Markets, Committee on Financial and Capital Markets, Keidanren (Japan Business Federation) Meeting, Tokyo

“How Financial Institutions should act for LIBOR cessation”, MORITA Tokio, Director-General of the Strategy Development and Management Bureau (available in Japanese) - January 24, 2020, At Friday Regular Meeting of Kinzai Institute for Financial Affairs, Inc, Tokyo

Keynote Speech “Challenges and Approaches on LIBOR cessation issue”, ISHIMURA Kozo, Director of the Risk Analysis Division, Strategy Development and Management Bureau (available in Japanese) - November 7, 2019, At PwC Japan Seminar, Tokyo

Opening Remarks “Main Points of the Public Consultation and Overview of Deliberations on Interest Rate Benchmark Reform in Japan and Abroad”, MORITA Tokio, Director-General of the Strategy Development and Management Bureau (available in Japanese)
Summary points
- August 1 2019, At Interest Rate Benchmark Reform Forum in Bank of Japan, Tokyo

Meetings with Industry Associations

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ The Life Insurance Association of Japan/ The General Insurance Association of Japan/ Japan Investment Advisers Association (available in Japanese) - July, 2023

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ The Life Insurance Association of Japan/ The General Insurance Association of Japan/ Japan Investment Advisers Association (available in Japanese) - June, 2023

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/Japan Investment Advisers Association (available in Japanese) - April, 2023

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks (available in Japanese) - March, 2023

Japan Investment Advisers Association (available in Japanese) - February, 2023

Japan Securities Dealers Association/ The Investment Trusts Association (available in Japanese) - January, 2023

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ The General Insurance Association of Japan (available in Japanese) - December, 2022

The Investment Trusts Association (available in Japanese) - September, 2022

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ Japan Securities Dealers Association (available in Japanese) - April, 2022

Major Banks/Regional Banks Association of Japan/ Second Association of Regional Banks/ Japan Securities Dealers Association (available in Japanese) - January, 2022

Major Banks (available in Japanese) - December, 2021

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ Japan Securities Dealers Association/ The Investment Trusts Association (available in Japanese) - September, 2021

Major Banks (available in Japanese) - August, 2021

Trust Companies Association of Japan/The Life Insurance Association of Japan/The General Insurance Association of Japan/ Japan Securities Dealers Association (available in Japanese) - July, 2021

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks (available in Japanese) - June, 2021

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ National Central Society of Credit Cooperatives (available in Japanese) - March, 2021

Regional Banks Association of Japan/ Second Association of Regional Banks (available in Japanese) - January, 2021

Major Banks/Regional Banks Association of Japan/ Second Association of Regional Banks/The General Insurance Association of Japan (available in Japaese) - December, 2020

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ Trust Companies Association of Japan/ The Life Insurance Association of Japan/ Japan Securities Dealers Association (available in Japanese) – November, 2020

Japan Financial Services Association (available in Japanese) – October, 2020

Regional Banks Association of Japan/ Second Association of Regional Banks/ The National Association of Shinkin Banks/ National Central Society of Credit Cooperatives/ National Association of Labour Banks (available in Japanese) – September, 2020

Major Banks/ Trust Companies Association of Japan/ The Life Insurance Association of Japan/ The General Insurance Association of Japan/ Japan Securities Dealers Association/ The Investment Trusts Association (available in Japanese) – July, 2020

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ The Life Insurance Association of Japan/ The General Insurance Association of Japan/ Japan Securities Dealers Association (available in Japanese) – June, 2020

Japan Financial Services Association (available in Japanese) – May, 2020

Japan Securities Dealers Association (available in Japanese) – April, 2020

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks (available in Japanese) – March, 2020

Major Banks/ The Life Insurance Association of Japan/ The General Insurance Association of Japan (available in Japanese) – February, 2020

Major Banks/ Regional Banks Association of Japan/ Second Association of Regional Banks/ Japan Securities Dealers Association (available in Japanese) – January, 2020

The National Association of Shinkin Banks/ National Central Society of Credit Cooperatives/ Trust Companies Association of Japan/ National Association of Labour Banks (available in Japanese) – November, 2019

Regional Banks Association of Japan/ Second Association of Regional Banks/ Japan Securities Dealers Association/ The Life Insurance Association of Japan/ The General Insurance Association of Japan (available in Japanese) - September, 2019

Major Banks (available in Japanese) - August 2, 2019

Staff Reports

"Review of JPY LIBOR Transition and Future Initiatives", Bank of Japan Review - May 30, 2022

"Financial Institutions' Preparedness for LIBOR Cessation and Future Actions with a Focus on the Results of the Joint Survey by the Financial Services Agency and the Bank of Japan", Bank of Japan Review - August 11, 2020

"Interest Rate Benchmark Reform in Japan", Accounting Standards & Disclosure Quarterly vol.68 (available in Japanese) - March 19, 2020

"Progress of reforming major interest rate benchmarks and future expectation", Kinzai Financial Weekly (available in Japanese) - January 15, 2018
  

Other Links

Bank of Japan

Interest Rate Benchmark Reform (Preparedness for the Discontinuation of LIBOR)

Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks

Statement regarding Adherence to the IBOR Fallbacks Protocol Launched by ISDA - November 6,2020
Statement regarding Calculation and Publication of Prototype Rates for Term Reference Rates - May 26, 2020
 

National Tax Agency

Tax Treatment of Financial Instruments with the Interest Rate Replacing LIBOR (Japanese)

 

Japanese Bankers Association

LIBOR Special Page
 

Contact Details

Risk Analysis Division, Strategy Development and Management Bureau