U.K. FPC Sought Contingency Plans in Case Benchmarks Unavailable

The Bank of England’s Financial Policy Committee, which oversees the stability of the lending system, said contingency plans should be made in case Libor and other benchmarks become unavailable.

The FPC initially made the recommendation privately in June 2013 to the Bank of England and the Financial Conduct Authority, according to a statement on the Bank of England’s website today.

It said it didn’t make the request public at the time “because of the risk of precipitating the unavailability of benchmark quotes that the recommendation was seeking to avoid.” The Financial Stability Board started contingency planning for benchmarks by September that year, prompting the FPC to close its recommendation, according to the statement.

Banks have been trying to withdraw from contributing to benchmarks amid concern they could face fines if found to have engaged in wrongdoing. Regulators are scrutinizing whether traders sought to manipulate key rates such as the London interbank offered rate and and the WM/Reuters rates, used by money managers to determine what they pay for foreign exchange.

Last year, Euribor-EBF ceased quoting Euribor in dollars after half the banks left the panel that sets the benchmark rate. In January, the International Swaps & Derivatives Association said it would cancel a European interest rate because Citigroup Inc. decided to stop submitting data that sets the ISDAfix Euro Libor rate.

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