Skip to main content
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
// //

Pedestrians walk past the Bank of England and The Royal Exchange in the City of London on Dec. 9, 2020.

DANIEL LEAL-OLIVAS/AFP/Getty Images

The Bank of England told markets to get ready for the end of Libor interest rates in a year’s time as regulators will be “watching closely” for laggards.

Market participants must quantify their Libor referenced contracts that mature beyond the end of 2021, BoE executive director for markets Andrew Hauser said on Wednesday.

“To stand a chance of controlling your destiny, you need to know what your exposures are, and how you’re going to deal with them over the course of next year,” Hauser said in a speech.

Story continues below advertisement

“Make and resource those plans now – we don’t want anyone to be caught out. And the regulators will be watching closely.”

The London Interbank Offered Rate or Libor is compiled in five currencies, including sterling and dollar, and used to price contracts from home loans to credit cards and derivatives worth up to $400 trillion globally.

From the end of 2021, it is largely being replaced by overnight rates set by central banks, such as Sonia which is compiled by the BoE.

Hauser said market participants should move all new business away from sterling Libor by the end of March and whittle down “legacy” contracts that mature beyond 2021.

Markets were making progress in ending the use of Libor, but “another jump” is needed in switching from Libor to Sonia in swaps to meet the end of March target, Hauser said.

Such goals were challenging, particularly in current difficult operating conditions, he said.

“But with Libor’s retirement now in the diary, sending new business its way isn’t just optimistic – it’s imprudent too.”

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies