Reference Rate Reform

Last updated on March 8, 2022. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Sections updated on the date above are indicated with an asterisk *)



The objective of this project is to monitor reference rate reform initiatives around the world to identify areas of GAAP that may need to be amended in response to those initiatives.


In response to concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation.
In March 2020, the Board issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The purpose of the amendments in that Update was to provide temporary relief to certain hedge accounting requirements and contract modification guidance. Topic 848 Scope

As part of the current market-wide shift related to reference rate reform, derivative central counterparties have been changing the interest rates used for margining, discounting, or contract price alignment for derivative instruments. Those changes occurred throughout 2020 across various currencies and reference rates.

In January 2021, the Board issued Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848): Scope, to clarify that the scope of Topic 848 includes derivative instruments subject to changes in the interest rate used for margining, discounting, or contract price alignment as a result of reference rate reform (that is, the discounting transition).

Current Project Related to Reference Rate Reform:

Fair Value Hedging

At the July 29, 2020 Board meeting, the Board decided to consider developing a principle for identifying interest rates eligible for fair value hedge accounting both within and outside the United States. Reference rate reform is expected to result in the emergence of new interest rates as alternatives to LIBOR, and other reference rates are expected to be discontinued.

A fair value hedge of interest rate risk is an optional accounting mechanism that may be used to reflect an entity’s risk management activities. Entities primarily elect to apply fair value hedging when they use an interest rate swap to hedge a fixed-rate asset or a liability against changes in its fair value due to changes in interest rates. An entity designates a benchmark interest rate that is used to measure the change in the fair value of the hedged fixed-rate asset or liability because of changes in interest rates.

Under current GAAP, the hedged item’s designated interest rate must meet certain criteria.  However, the hedging instrument’s referenced index does not need to be identical to the hedged item’s designated interest rate to qualify for fair value hedge accounting in accordance with Subtopic 815-20, Derivatives and Hedging—Hedging—General. For example, an entity may use an interest rate swap that is indexed to an interest rate that is different from the designated interest rate as long as the two rates are expected to be highly correlated over the life of the hedge. In that case, the effectiveness of the fair value hedge would be affected by the how closely those two rates are correlated.

Exposure Draft(s):

There are no exposure documents at this time.

There are no media releases or educational materials at this time.

Decisions Reached at Last Meeting (December 15, 2021):

The staff updated the Board on its progress on the reference rate reform—fair value hedging project. The Board directed the staff to perform additional outreach and research. The Board made no decisions.

The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

The following are links to the minutes for each meeting.  To view Board meetings and handouts from the past 90 days, click here.
December 15, 2021 Board MeetingReference Rate Reform—Fair Value Hedging. The Board discussed the development of a principle for identifying benchmark interest rates eligible for fair value hedge accounting in all jurisdictions.

The staff will perform research to be presented to the Board during deliberations.

Kenjiro Matsuo
Project Manager

Rosemarie Sangiuolo
Project Consultant

Samantha Tice
Practice Fellow

Colin Greeff
Postgraduate Technical Assistant

Matthew Shea
Postgraduate Technical Assistant

The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.