The BoE has published a discussion paper seeking input on how to address the issue of accepting LIBOR-linked collateral that matures after 2021 and lacks adequate fallback provisions, as the phase out date for the benchmark rate draws closer. The paper proposes a combination of rising haircuts and eligibility restrictions; market participants have been asked to respond by 27 September. LIBOR-linked assets are used to collateralise about 10% of banks’ current drawing capacity with the BoE. Relevant document: Join the revolution! In its latest quarterly report, the Bank said it had “continued to see evidence of an improving economic outlook, including strong growth in consumer spending and household spending”.
The BoE has published a discussion paper seeking input on how to address the issue of accepting LIBOR-linked collateral that matures after 2021 and lacks adequate fallback provisions, as the phase out date for the benchmark rate draws closer. The paper proposes a combination of rising haircuts and eligibility restrictions; market participants have been asked to respond by 27 September. LIBOR-linked assets are used to collateralise about 10% of banks’ current drawing capacity with the BoE. Relevant document: Join the revolution! Why it makes business sense to move on from LIBOR ~ BoE ~ 27-Jun-19