Brousseau, V., Chailloux, A. and Durré, A., (2013), “The LIBOR scandal: What’s next ? A possible way forward”, VoxEU, 09 December.
In the aftermath of the LIBOR scandal, it is important to re-establish a credible reference rate for the pricing of financial instruments and of wholesale and retail loans. The new candidate must meet the five criteria suggested by the Bank for International Settlements – reliability, robustness, frequency, availability, and representativeness – in all circumstances. This column argues that strengthening governance and/or adopting a trade-weighted reference rate is probably the fastest approach, but not necessarily sufficient for a resilient reference rate in the long run.
After the first allegations of LIBOR manipulation in May 2012 – which eventually resulted in investigations into banks and individuals in various countries as of June 2012 – the reliability and credibility of unsecured reference rates in various currencies (the LIBOR in pounds, dollars, euros, and yen, and also the EURIBOR) have been severely questioned. With a view to restoring the credibility of these important reference interest rates, financial regulators have launched a broad consultation to study possible options to avoid similar manipulation in the future. There has been an intense debate between defenders of a low-key approach to reforming money-market references and the supporters of a more drastic overhaul. Several questions arise: Do we need reference interest rates? How/why did manipulation occur and what can we learn from it? And which short- to longer-term adjustments could be envisaged?
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Σχετικές Αναρτήσεις
- Micossi, S., Bruzzone, G. and Carmassi, J., (2013), “The New European Framework for Managing Bank Crises”, The Centre for European Policy Studies, CEPS Policy Brief No.304, 21 November.
- Beck, T. and Trebesch, C., (2013), “A bank restructuring agency for the Eurozone – cleaning up the legacy losses”, VoxEU, 18 November.
- Jordà,O., Schularick, M. and Taylor, A., (2013), “Sovereigns versus banks: Crises, causes and consequences”, VoxEU, 18 October.