Continuing the ongoing Libor scandal, a group of central bankers have called for the Libor interest rate to be replaced by a range of different reference rates based on actual market transactions.

A committee of central bankers at the Bank for International Settlements has published a report calling for greater use of transaction data to produce reference interest rates, as well as ‘robust fallback arrangements’ to protect against possible breakdowns in the markets.

The report recommends greater involvement of central banks and supervisory authorities in producing the reference rates: Mervyn King, chair of the committee and Bank of England Governor  said: ‘It is clear that central banks must play an important role in supporting the development of alternative reference rates.’

Many regulators welcome the proposals, whilst some regulators warn of moving too quickly to market-based transactions.

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