NEW YORK, Nov 2 (Reuters) - The man expected to take the reins at the U.S. Federal Reserve next year said on Thursday that Wall Street’s transition from the London interbank offered rate, or Libor, and other reference rates will be complicated and costly but likely necessary.
In a pre-recorded video address from Washington, Fed Governor Jerome Powell focused on the business of regulating banks even while markets focus on how he would run the world’s most powerful central bank. U.S. President Donald Trump is expected later on Thursday to name him as the successor to Fed Chair Janet Yellen.
After apologizing for not being able to attend the New York conference in person, Powell said the transition from Libor will “involve significant costs” for broker-dealers and others who rely on it. Yet it would likely be necessary after some of the world’s biggest banks were found to have manipulated Libor in recent years, setting up a 2021 deadline for a new system.
“We have to acknowledge that the transition will be complicated. Unfortunately, as I have discussed, we cannot guarantee that it won’t be necessary,” Powell, a soft-spoken centrist who has been a Fed governor since 2012, told the gathering of market participants. “Despite those complications and costs, a transition may prove necessary.”
Reporting by Jonathan Spicer; Editing by Paul Simao