We are working to identify and remove any unnecessary regulatory obstacles to transition, and clarify supervisory expectations.8 And we help provide international liaison and leadership through the Financial Stability Board’s Official Sector Steering Group, co-chaired by Andrew Bailey and John Williams. 6  www.fca.org.uk/news/speeches/next-steps-transition-libor www.bankofengland.co.uk/-/media/boe/files/financial-policy-summary-and-record/2019/december-2019.pdf See for instance www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/letter/2019/prudential-regulatory-framework-andlibor-transition.pdf and www.fca.org.uk/markets/libor/conduct-risk-during-libor-transition 7 8  3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  It is in that spirit that I want today to announce two new initiatives aimed at further supporting LIBOR transition:  -  First, and in direct response to feedback from market practitioners, the Bank is intending to publish a compounded SONIA index from July 2020. Complementing our existing overnight SONIA rate, the index will provide a flexible tool to help market participants construct compounded SONIA rates in an easy and consistent way, supporting achievement of their 2020 Q3 target for new issuance. -  The second relates to the Bank’s own lending operations for banks and other financial intermediaries. From October this year, we will begin increasing haircuts progressively on LIBOR-linked collateral we lend against. This will give firms the time they need to replace that collateral with risk free rate alternatives, ensuring their borrowing capacity is maintained while also protecting public funds. This approach reflects the clear preferences of respondents to our discussion paper last year.9  These initiatives are aimed at turbo-charging sterling transition, helping the market deliver against its commitment to transition away from LIBOR and further de-risking sterling markets.

As pointed out in the Economic Commentary “The lower limit of the Riksbank’s repo rate” (Beechey and Elmér, 2009), which was published on the Riksbank’s website last autumn, one cannot find any problems in the financial markets that can be attributed to low interest rates. Since then a few more months have passed. Both the Monetary Policy Department and the Financial Stability Department at the Riksbank closely follow developments in the financial markets and have very good information about them. There are still no signs that low interest rates have entailed any problems with regard to financial stability or the functioning of the financial markets. The profitability of the major banks, in the form of the net interest margin, has been stable and their share of deposits from households has not changed noticeably. The redistribution of capital on the fund market has also been moderate. The financial infrastructure has not been affected by any problems during the period of low interest rates and resilience against disruptions of the financial infrastructure is deemed to be high. The final paragraph on page 28 mentions risks linked to exaggerated lending and rapid increases in house prices. These risks have been closely studied in both the Riksbank’s most recent Financial Stability Report and by Finansinspektionen (the Swedish financial supervisory authority) in its report on the Swedish mortgage market and bank lending (Finansinspektionen, 2010).