Randall Quarles, the Fed’s vice chairman for financial regulation, said Monday that bankers must accelerate efforts to separate business rates from LIBOR, the indicator, and warned that “security and robustness” could be questioned if banks still use LIBOR by 2022.
Mr. quals said the Fed will closely follow the efforts of bankers to replace LIBOR in 2021, and that banks could be punished if they move too slowly. By the end of this year, he added, bankers must “completely stop” the use of LIBOR in new contracts.
“After 2021, we believe that the use of LIBOR in new contracts will bring security and robustness risks and we will review the bank’s approach accordingly,” said quals
Quals’ comments are the latest efforts by global regulators to urge the financial system to abandon LIBOR. Regulators warned LIBOR would not exist after the end of June 2023.