FILE PHOTO: A bird flies past The Bank of England in the City of London, Britain, December 12, 2017. REUTERS/Clodagh Kilcoyne

LONDON (Reuters) - Bank of England Deputy Governor Sam Woods said on Wednesday he would meet banks in the first quarter of 2020 to check on whether regulations are hampering their ability to ditch the use of the Libor interest rate benchmark.

Banks were fined billions of pounds for trying to rig the London Interbank Offered Rate and the Bank of England wants them to switch to the central bank’s Sonia overnight rate for pricing financial contracts such as derivatives.

“We consider that the need to transition is a critical one for all involved, and firms must take appropriate action now so that they have transitioned to alternative rates ahead of the end of 2021,” Woods wrote in a letter to an industry working group.

“I would like to suggest that we meet in spring 2020 to consider how work on the regulatory interactions of benchmark reform is progressing.”

The working group has told Woods there are regulatory impediments to moving away from Libor, including rules on capital requirements.

Amending capital instruments to replace Libor with Sonia could end up making them ineligible to be included in a bank’s capital buffer, the working group has said, warning that this could result in a sudden drop in a bank’s capital position.

Woods said in his response that it was not necessary to reassess the eligibility of a capital instrument solely because a different reference rate is used.