Libor could be scrapped after row

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The FSA has published a paper which outlines a number of proposals to overhaul the way the Libor rate is set // The FSA has published a paper which outlines a number of proposals to overhaul the way the Libor rate is set
The FSA has published a paper which outlines a number of proposals to overhaul the way the Libor rate is set
Libor could be scrapped as a key indicator for the City after being branded "not fit for purpose" in an inquiry set up in the wake of the rate-rigging scandal.
An initial discussion paper by Martin Wheatley, who heads conduct regulation for the Financial Services Authority, outlined a number of proposals to overhaul the way the rate is set, which suggests regulators should be given more powers to prosecute traders.
Other proposals include using more hard data to set the rate and introducing a standard procedure to corroborate submissions, while alternative benchmarks should be considered for setting key rates that affect important financial transactions.
The Wheatley Review, which was ordered by Chancellor George Osborne after Barclays was hit with a £290 million fine for Libor manipulation, said any move to using new rates would need to be carefully planned to limit disruption.
Mr Wheatley said: "The attempted manipulation of Libor and its European equivalent Euribor has cast a shadow over the industry at large and the construction and governance of the benchmarks themselves. Trust in a vital part of the financial system has been lost, and timely action is needed to regain it."
Libor is an indicator of how much banks are charged to borrow money. It is a key benchmark in the financial services industry and is used to set the price of hundreds of trillions of dollars of contracts across the world, including some mortgages and loans to businesses.
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