How to mend the Libor process

How to mend the Libor process

david-rowe

Perhaps the first point to make about the Libor rigging scandal is that concerns about the Libor determination process are not new. There was a flurry of interest in the topic when Libor diverged so dramatically from other benchmark rates in 2008 – but as long ago as 1998, observers had warned that the polling process used to set Libor was susceptible to misreporting, whether intentional or accidental.1

Those familiar with the process have always recognised Libor is not based on actual transacti