From this point of view, I would like to highlight the strategic importance of the European Payments Initiative (EPI) project, which currently represents the only project for a joint solution rather than an interoperability of heterogeneous domestic solutions. We, at the Banque de France, therefore hope that the launch of the first EPI solutions, scheduled for 2023, will convince other banks to join this initiative which offers Europe a great opportunity to build an independent European payments market for the future. To conclude, in the face of the many short and medium-term risks and challenges, I would like to share with you, the members of the OCBF and more broadly with the stakeholders in our banking system, a message of confidence but also of great vigilance. The reforms conducted by the regulators and the efforts made by the banks over the past decade have borne fruit and the European banking system has demonstrated its great resilience during the health crisis and then in the face of the war in Ukraine. The banking sector has also managed to support government efforts to deal with the crisis and kick start recovery. But these developments should encourage us collectively to remain very vigilant in an environment marked by a rise in shocks and strong uncertainty and to pursue our efforts to bolster this resilience in order to successfully meet current and future challenges. 6
6 We urge all sterling lenders and issuers to consider following suit, making use of the guidance material now available or emerging from the sterling working group and other sources.7 For the more limited range of borrowers in cash markets who feel an operational imperative for a forward-looking term SONIA rate, it should in principle be possible to take daily ‘snapshots’ of the SONIA curve at periodic maturities. A number of potential providers have come forward to develop such functionality. 8 A third benefit of LIBOR transition lies in the opportunity it provides to modernise the technology and infrastructure supporting sterling markets. I have already mentioned the scope to bring the SONIA curve out of the shadows, deepening liquidity, increasing transparency and providing new term benchmarks. The emerging trading conventions for SONIA products will require new functionality in corporate debt management systems. In itself that is of course a cost. But that infrastructure upgrade provides a much-needed opportunity to rationalise aging architecture in both front and back office systems. Firms preparing to novate legacy LIBOR positions – one of the most challenging and sensitive parts of the transition programme – may choose to backload previously uncleared trades into clearing houses. That would allow them to take advantage of auction or trade compression mechanisms with providers working on developing innovative solutions specifically tailored to LIBOR transition.