LONDON (Reuters) - The European Union won’t legislate to extend the life of a widely used euro interest rate benchmark despite warnings of a market crunch, a senior official from the bloc’s executive body said on Monday.

After banks were fined millions of dollars for trying to rig the Libor and its sister benchmarks that are used in trillions of dollars of contracts like mortgages and credit cards, authorities in Europe and elsewhere are ushering in replacements.

A euro benchmark known as ESTER, compiled by the European Central Bank, will replace the current EONIA benchmark.

But ESTER, an overnight rate, won’t be published on a daily basis until October next year, just months before EONIA is due to be scrapped in December 2019 as it won’t comply with EU rules coming into force in the following month.

Banks want a delay to avoid a potentially disorderly transition for thousands of financial contracts, but EU legislation proposed by the European Commission would be required.

Tilman Lueder, head of the securities markets unit at the European Commission, said there was no immediate prospect for a grace period for EONIA given that the European Parliament will go into recess next April ahead of elections.

EU rules must be approved by the parliament and EU member states, which can be a lengthy process.

“Legislative proposals will not be submitted by my institution,” Lueder told a conference held by AFME, a banking industry body.

“The European Commission will not grant an extension. It’s as simple as that.”

Banks have warned there is too little time to migrate from EONIA to ESTER and that a year or two extra is needed.

“We are preparing for the worst,” Carlos Molinas, global head of business compliance at Credit Agricole CIB bank, told the conference.

The private sector, however, should be working on fallbacks as well, Molinas added.