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Libor reforms do not include structural changes, acc. to Bloomberg

 |  June 26, 2012

Bloomberg reports that the group proposing reforms to the Libor rate are resisting structural changes, such as basing the rate on actual trades or taking away oversight from the British Bankers’ Association (BBA). The group was established by the BBA and is comprised of U.K. bankers and regulators. The changes they propose are incremental, and include a code of conduct for banks and greater scrutiny over time. Imposing deeper changes would jeopardize invalidating trillions of dollars of contracts.

Libor is currently determined by estimates, not real trades: banks are asked to estimate how much it would cost for them to borrow from each other. Regulators in the U.S., Canada, and elsewhere are investigating bank collusion to manipulate Libor rates.

Full content: Bloomberg


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