The HKMA maintains regular dialogue with AIs on their progress in transitioning away from LIBOR and has collaborated with industry associations to develop a number of tools to assist AIs in supporting their customers’ migration to alternative reference rates (ARRs). 16% of these LIBOR-linked assets and liabilities, and 1% of these derivatives contracts require remediation to incorporate adequate fallback or other transition arrangements.

Additionally, there were derivatives contracts involving an aggregate amount of HK$31.0 trillion in notional value referencing LIBOR. As of December 2021, there were HK$3.9 trillion of assets and HK$1.1 trillion of liabilities in the Hong Kong banking system referencing LIBOR, representing about 23% and 7% respectively of the banking system’s total assets and total liabilities denominated in foreign currencies. The HKMA conducts a regular survey to monitor the banking sector’s exposures to LIBOR contracts. The Hong Kong banking sector’s exposures to LIBOR contracts Similar multi-rate approaches have also been adopted by many other jurisdictions. While the Hong Kong Dollar Overnight Index Average (HONIA) has been identified as an alternative to HIBOR, there is no plan to discontinue HIBOR. In Hong Kong, the Hong Kong Interbank Offered Rate (HIBOR) has been in place for many years and is still widely recognised by market participants as a credible and reliable benchmark.

Overall, the Hong Kong banking sector has transitioned away smoothly from the LIBOR settings that ceased publication after end-2021. The remaining US dollar LIBOR settings will continue to be published until 30 June 2023.

In accordance with the timeline set out by the UK Financial Conduct Authority (FCA), the publication of all sterling, euro, Swiss franc and Japanese yen LIBOR settings, as well as the 1-week and 2-month US dollar LIBOR settings ceased after 31 December 2021. Over the past few years, the Financial Stability Board (FSB) had worked with authorities and standard-setting bodies to develop and implement reform proposals to enhance the robustness of interest rate benchmarks.

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