(Adds details and background)
ZURICH, Oct 6 (Reuters) - A panel of experts has proposed using the Swiss Average Rate Overnight (SARON) for secured loans as an alternative benchmark to the traditional Swiss franc Libor, the Swiss National Bank said on Friday.
The national working group on Swiss franc reference rates (NWG), which combines representatives of private-sector banks and the SNB, "recommended SARON as alternative to the Swiss franc Libor" at a meeting on Thursday, the SNB said.
Around 6 trillion Swiss francs ($6.12 trillion) worth of contracts use the London Interbank Offered Rate (Libor) as a benchmark, making it by far the most important interest rate for the Swiss economy.
The SNB also conducts monetary policy by steering interest rates in the Swiss franc money market, telling the market in what range it intends to keep three-month Libor.
But the Libor measure - a daily rate in a range of currencies - is on the way out after banks were fined billions of dollars for trying to manipulate it, and the SNB has been looking at other options.
The head of Britain's financial markets watchdog said in July a substitute for the widely used Libor should be in place for banks to use by the end of 2021.
Ending Libor will pose a challenge to the private sector but will not hinder the SNB's ability to conduct monetary policy, deputy governing board member Dewet Moser said last month.
Libor is based on submissions from banks of interest rates they believe they would be charged by others for borrowing money.
The Swiss franc Libor target range is one of the three elements of the SNB's monetary policy strategy, along with its definition of price stability and its conditional inflation forecast.
Moser had said the SNB was looking at SARON and would support market participants during the rate benchmark transition process, but stressed that market participants were responsible for choosing alternative rates and ensuring a timely switch.
$1 = 0.9796 Swiss francs Reporting by Michael Shields; Editing by Toby Chopra