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September 07, 2012 at 05:09 AM
A majority of investors surveyed around the world believe that the London interbank offered rate (LIBOR), currently the subject of scrutiny and investigation everywhere from England to the U.S. to the European Commission (EC), will be gone within five years, and a more tightly regulated benchmark will take its place.
Bloomberg reported Friday that confidence in the interbank rate has been so damaged, according to 44% of respondents to a Sept. 4 Bloomberg survey, that a new benchmark will boot it from the marketplace. Others, however, are more cynical, with 34% saying LIBOR will linger just as it is. A substantial 22% said they didn’t know.
After Barclays was hit with $480 million in penalties for its part in manipulating the interbank rate, authorities dug deeper to see how far the rot in the system went. Countries all over the world are investigating their own interbank interest rates and confidence in the system has fallen, after it was shown that banks had colluded on pushing the rate up or down depending on how it would best profit them.
The scandal surrounding the rate that affects everything from credit card rates to mortgages has hit the British Bankers’ Association (BBA) hard. In 2008, the Bank for International Settlements expressed concern over manipulation of the rate to the BBA, which failed to take action on the information.
