A group of senior banking industry policymakers is to undertake its own review of the scandal surrounding the London interbank offered rate (LIBOR).
Following a meeting of senior central bankers, the Bank of England’s governor, Mervyn King, said that the Bank for International Settlements (BIS) governors, “have agreed to set up a group of senior officials to take forward examination of these issues, and to consult with the market in order to provide input into the wider official debate co-ordinated by the Financial Stability Board.”
“The BIS governors look forward with great interest to the recommendations of the Wheatley LIBOR Review, and to the reports of other official groups examining reference rates used in financial markets,” King added.
The reviews being carried out by UK and European policymakers, and others, come in the wake of revelations suggesting that banks tried to game the key benchmark interest rate known as LIBOR, in order to support their own interests — for example, to signal their own creditworthiness to the market, or to impact the valuation of their derivative positions. The reviews are looking at how to operate and govern these benchmark rates to avoid this sort of manipulation.
King issued the statement after a meeting of the Economic Consultative Committee — an informal group comprised of BIS governors, the central bank governors from India and Brazil, and the BIS general manager, which supports the group of governors from 30 central banks in major advanced and emerging market economies known as the Global Economy Meeting (GEM) — in Basel on Sunday.