Further details are available at: www.theice.com/publicdocs/ICE_LIBOR_Methodology.pdf 4  8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  corporate borrowing, and underscores the pressing need to complete the transition away from LIBOR by end-2021. By contrast, volumes underpinning SONIA, the market’s preferred alternative sterling risk free rate, rose sharply, as investors sought safer havens. Chart 9: 3m £ submission composition Transaction-based Transaction-derived Expert judgement  Chart 10: CCFF usage and capacity Commercial paper purchases under CCFF, less redemptions CCFF drawing capacity  Per cent 100  £ bn 70  90  60  80 70  50  60 ‘Dash for cash’  40  50 30  40 30  20  20 10  10 0 Oct 19  Dec 19  Feb 20  Source: IBA. See footnote 4 in the text for definitions of the data shown. 0 23 Mar  06 Apr  20 Apr  04 May  18 May  Source: Bank of England. Dashed lines show linear interpolation between launch date and first public data release. Moment 5: keeping funding flowing to UK companies Although most of my remarks have been about stabilising the financial system, the ‘dash for cash’ was of course just as prevalent in the corporate sector – and the stakes just as real. Otherwise-viable companies, cut off from their normal sources of income but still needing to meet salaries, rent and taxes, feared losing access to finance, forcing them to eat into their cash buffers or start winding themselves up.
And the trigger for conversion from debt into equity could be at a margin of comfort away from true catastrophe; say, a percentage point or so above the minimum regulatory capital ratio. Of course, this would entail a structural shift over time in investment portfolios. But the system might be able to manage that adjustment. After all, it managed the all together less desirable adjustment to the development of the existing hybrid capital markets. But demand for contingent capital is, inevitably, uncertain at this stage. As are the terms on which it will be provided. We welcome the growing private sector focus on this. 4  King Mervyn A. (2009), “Speech by Mervyn King, Governor” to Scottish Business Organisations, Edinburgh, October 2009. See also Tucker P M W (2009a), “Remarks by Paul Tucker”, Panel session at the Turner Review Conference, London, March 2009 (pp. 5) and Tucker P M W (2009b), “The repertoire of official sector interventions in the financial system: last resort lending, market-making, and capital”, Bank of Japan’s 2009 International Conference, Tokyo, May 2009 (pp. 19). In the academic community, the idea was aired in “An Expedited Resolution Mechanism for Distressed Financial Firms: Regulatory Hybrid Securities”, Squam Lake Working Group on Financial Regulation, April 2009, Council on Foreign Relations. Dudley, William C. (2009) “Remarks by William Dudley” at the Institute of International Bankers Membership Luncheon, New York City, October 2009.