Tired of complex financial terms? You are not alone! But let me tell you about something important that changes the game in the financial world: SOFR. This abbreviation that may seem strange is simply "Secured Overnight Financing Rate". Imagine that LIBOR, that old benchmark that ruled interest rates for decades, has retired to make way for a stronger and more transparent new player!

SOFR: In very brief terms

SOFR is a daily interest rate. But it's not just any rate; it reflects the cost of borrowing money overnight, with very strong guarantees: U.S. Treasury securities. In simple terms: it is the average rate banks pay to borrow money safely and securely.

Why all this noise about it?

* No more manipulation! LIBOR relied on banks' "estimates", which opened the door to manipulation. SOFR, on the contrary, is based on real and actual transactions in the market. This means 100% transparency.

* The official alternative: After years of debate, LIBOR was abandoned. SOFR is the alternative chosen by the world, making it the cornerstone for pricing billions of dollars in loans and securities.

* 100% guaranteed: The word "safe" in its name is no joke. The transactions from which SOFR is derived are backed by government assets, significantly reducing risks.

SOFR in Jordan: Does it affect you?

You might say: "And what does this have to do with me in Jordan?". Well, even if you don't deal with SOFR directly, its impact extends globally and reaches our markets. Banks and financial institutions in Jordan that deal with global financial markets, or borrow in foreign currencies, are affected by this shift. This significant change enhances transparency and stability in global financial transactions, which positively affects our economy as a whole.

In summary: Transitioning to SOFR is a giant step toward a more robust and fair global financial system. It puts an end to indices that can be manipulated and provides us with an indicator based on direct market reality.

Do you think this change will bring more trust and stability to our financial markets? Share your opinion!