Initial proposals to reform the flawed Libor rate setting process have been announced today by the managing director of the Financial Services Authority (FSA), Martin Wheatley.
In an initial review paper, Mr Wheatley claimed the current rate setting process was 'no longer viable' and that inter-bank lending rates should be set based on actual market data rather than independent submissions from banks.
He added that plans for stricter regulation and stronger sanctions would combat abuse of the system.
The British Bankers' Association is currently responsible for overseeing the process, although it is not regulated by the FSA or the Bank of England.
The proposals set out to overhaul the current system, which has been heavily criticised following the Libor rate fixing debacle which resulted in Barclays being fined a record £290 million.
Mr Wheatley said: "Libor is something that is fundamental to the smooth running of markets, and to confidence in the financial system.
"Retaining Libor unchanged in its current state is not a viable option, given the scale of identified weaknesses and the loss of credibility that it has suffered."
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.