BRUSSELS launched a criminal crackdown yesterday on the rigging of global interest rates in the wake of the scandal surrounding the fixing of the London Interbank Offered Rate (Libor).
Manipulating benchmark rates such as Libor – the rate at which UK banks lend to each other – and Euribor for European banks, will be added to insider dealing as criminal offences, the European Commission said in a statement.
EC justice commissioner Viviane Reding warned that public confidence in the financial sector had plummeted after the latest revelations about rate fixing.
The commissioner said EU action “was needed to put an end to criminal activity in the banking sector and criminal law can serve as a strong deterrent”.
The EC said it wanted European Union members to pass new laws. “Public confidence has taken a nosedive with the latest scandals about serious manipulations of lending rates by banks,” Reding said.
“This is why we are today proposing EU-wide rules to tackle this type of market abuse and close any regulatory loopholes.
“A swift agreement on these proposals will help restore much-needed confidence of the public and investors in this crucial sector of the economy.”
Libor and Euribor are benchmarks for in excess of $500 trillion (£323 trillion) in global contracts, including loans and mortgages.
The Libor scandal has triggered regulatory investigations and already cost the scalp of Barclays group chief executive Bob Diamond and his chief operating officer Jerry del Missier after the bank was the first to go public about the practice.
In testimony to politicians yesterday, US treasury secretary Timothy Geithner claimed Libor’s structure gave banks both the incentive and the opportunity to manipulate the rate.
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Tuesday 21 May 2013
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