LONDON, Feb 26 (Reuters) - The Bank of England told banks on
Wednesday to accelerate their efforts to ditch the use of Libor
if they want to avoid facing more punitive terms when borrowing
from the central bank.
The BoE wants Libor, which banks were fined for trying to
rig, replaced with the central bank's overnight "risk-free"
Sonia interest rate.
"We need to see another decisive acceleration in effort in
2020 to ensure risk-free rates are adopted across the full range
of sterling business, and Libor is left behind for good," Hauser
told a derivatives industry conference.
Hauser said that from October, the Bank will start
increasing "haircuts" progressively on Libor-linked collateral
used by banks to borrow from the central bank, meaning more
collateral would be needed to cover the same amount borrowed.
The BoE will also publish a "compounded" Sonia index from
July.
(Reporting by Huw Jones, editing by Carolyn Cohn)