Multinational Finance Journal, 2023, vol. 27, no. 3/4, pp. 50-67 |
https://doi.org/10.5281/zenodo.14956550
Email: iordanis@citadel.edu
G. Geoffrey Booth , Michigan State University
Abstract:
Abstract: The Secured Overnight Financing Rate (SOFR), defined by the U.S. Alternative
Reference Rates Committee (ARRC) and now used by the U.S. Federal Reserve instead of the
London Interbank Offer Rate (LIBOR) because of a loss of faith in its veracity, has clear and strong
historical roots. Its calculation is closely related to that of the florin-denaro daily exchange rate
that the Arte del Cambio (moneychangers guild) developed and implemented in the Repubblica
Fiorentine (Florence) city-state located in what is now Italy from 1252 to 1532. This paper
explores the how SOFR is defined and calculated by the U.S. Federal Reserve and its economic
and mathematical relationship to what has become known as the Florin Fix, i.e., the calculation of
Florences’ exchange rate between its gold florin and silver billon denari.
Keywords : SOFR; LIBOR; Benchmarks; Market Microstructure; Banking; Economic and Monetary Policy; Late Middle Ages and Early Renaissance; Economic History
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