Libor has come under intense scrutiny since Barclays was fined $450m in late June 2012 for manipulating it. Some of the world’s most powerful policy-makers, including Ben Bernanke, chairman of the US Federal Reserve, have attacked its flaws.
But whatever the criticisms, Libor is too important to be shelved. Its significance as a benchmark has risen since its introduction in 1986, to the point that perhaps $800tn of financial products are referenced to it. These range from interest rate swaps to corporate loans to residential mortgages.
