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LONDON (AP) — British regulators suggest that the end is near for Libor, the financial benchmark that was at the heart of a global market-rigging scandal.
The Financial Conduct Authority is urging banks to find an alternate to the London Interbank Offered Rate after 2021 as a dearth of financial transactions puts its relevance into question.
The rate has been steeped in scandal, but FCA chief Andrew Bailey said Thursday it's the sustainability of the rate that is in question "not because we suspect further wrongdoing or have any evidence of such."
Libor is the rate banks use to borrow from each other and is used to price services like mortgages, bonds and consumer loans globally. In 2012, it emerged that employees at several global banks had colluded to manipulate the rate to their own advantage. Investigations in the U.S., Britain and elsewhere led to fines as well as the resignation of Barclays CEO Bob Diamond, among others.
The Bank of England has suggested it be replaced with another index average.
Bailey said that having moving to another system after 2021 would give banks enough time to adapt and "reduce the risks and costs of a more sudden change."
"The planning and the transition must now begin," he said in a speech in London.
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