As the economic concerns surrounding COVID-19 cause a “cash crunch” for U.S. dollars and cause spikes in interest rate benchmarks, the finance industry has begun to question whether LIBOR and its upcoming successor, SOFR, are appropriate measures for lending markets. As the value of benchmarks is the low variance and reliability of the rate, the recent volatility is a sign that the rates may not be as consistent as believed. “If anything, this crisis should debunk anyone saying LIBOR is still a valid rate,” says a treasurer at a European bank.

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