A report, carried out in response to the Libor interest rate rigging scandal last June, has been published today and recommends a ‘complete overhaul’ of the system.

Martin Wheatley, author of the report and managing director of the FSA, stated that ‘society has lost confident in banks… and we need to restore that.’

Key recommendations of the report are:

  • A new regulatory structure for the Libor.
  • Criminal sanctions for those who attempt to manipulate it.
  • Other groups invited to apply to take of the BBA’s role in setting the Libor.
  • Reducing the number of daily fixings from 150 to 20.
  • Reducing the number of currencies looked at.
  • Encouraging banks outside of the current 20 rate-setters to submit rates to the Libor, making it more representative.

The BBA has called the review an ‘essential step’ towards reforming the Libor and said that it would work closely with the government and regulatory bodies towards achieving its recommendations, including accepting the transfer of oversight of the Libor to another body.

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