The London Interbank Offered Rate (Libor) scandal has
highlighted the widespread inefficiencies within the
rate-setting process. The US Federal Reserve chairman has
branded the process as structurally flawed and some bankers
have searched for alternative market indices.
It's been two months since Barclays paid the US Commodity
Futures and Trading Commission (CFTC) and the UK's Financial
Services Authority (FSA) a $453 million fine to settle claims
over falsifying Libor rates. In that time, authorities in the
US, Europe and Asia have commenced broader investigations into
suspected manipulation. But market debate has focused on how
the key market index must change.
According to an IFLR poll, scrapping Libor is not the
solution. CMS Cameron McKenna's Daniel Winterfeldt says it is
important to remember that Libor has been used extensively and
successfully in the marketplace for some time. "Eliminating
Libor would potentially create liquidity issues and leave the
market searching for a...