In its latest financial policy and summary record, the bank emphasised that the pace of transition efforts to alternative benchmark rates “now needs to accelerate”, with the Financial Policy Committee (FPC) keeping a close eye on progress.
The Bank of England noted that the Prudential Regulation Authority and Financial Conduct Authority were taking measures to “step up” their monitoring of how exposed firms are to Libor and what they are doing to reduce that exposure.
And the bank made clear that the FPC will consider “potential policy and supervisory tools” which could be deployed to push firms to get a move on in reducing the stock of legacy Libor contracts to “an irreducible minimum” by the end of 2021.
Last month Mortgage Solutions reported prominent figures within the mortgage industry calling on colleagues to “wake up” to the scale of work ahead in moving away from Libor.
A poll last month for risk advisory firm JCVR also found a lack of progress in renegotiating Libor-based contracts, which the firm said was “concerning”.
Preparing for Brexit
The report also notes that the uncertainties around Brexit “continue to weigh” on economic activity across the country.
And while there has been “some improvement” in preparation for a no-deal Brexit, there remain risks of “economic disruption”.
It adds: “The core of the UK financial system including banks, broker dealers and insurance companies is resilient to and prepared for the wide range of risks it could face, including a worst-case disorderly Brexit.”