LONDON (Reuters) - The Bank of England said on Wednesday that it wanted the SONIA measure of overnight interest rates to replace scandal-hit LIBOR measure as the main benchmark for commercial sterling interest rates by the end of 2021.
"It has become increasingly clear that we cannot rely on LIBOR in the long term," BoE Governor Mark Carney said in a speech to bankers in London.
Carney said there was a risk that the banks which currently quote interbank lending rates that are used to calculate LIBOR might pull out and precipitate the benchmark's collapse, which he added "raises obvious financial stability concerns".
LIBOR - a measure of interbank lending rates for various time periods - is used as the basis for trillions of pounds worth of contracts. But during the financial crisis, some traders manipulated the rate, leading to criminal convictions and huge fines for international banks.
The BoE said it would broaden a working group which would steer the transition away from LIBOR to include fund managers and non-financial companies that issue debt, as well as bankers.
Barclays chief compliance officer Francois Jourdain would remain chair of the group, aided by Shell finance executive Frances Hinden and Legal & General Investment Management's Simon Wilkinson as vice-chairs.
(Reporting by David Milliken and Huw Jones; Editing by William Schomberg)