The Developments Of Libor / Euribor Scandals

1182 Words Apr 10th, 2016 5 Pages
II. THE DEVELOPMENTS OF LIBOR/EURIBOR SCANDALS
As mentioned on I.2, Libor and Euribor have the similar rate setting processes, thus, both Libor and Euribor have the same manipulative problems. This part will present some differences of Libor and Euribor then introduce the developments of Libor/Euribor scandals as well as explain the reason why they are the biggest scandals that financial world have seen so far.
1. Libor scandal Libor is considered as the most crucial benchmark over the world aimed at setting temporary interest rates which are grounds for interest rates or base index of about $360 trillion worth of global financial products, including loans, savings, mortgages or futures, options and swaps . Prior to Libor scandal,
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2. Euribor manipulation
The European Banking Federation (EBF) identifies Euribor as ‘the rate at which euro interbank term deposits are being offered within the EMU zone by one prime bank to another at 11.00 am Brussels time’ , which is base for around 450 trillion dollar worth of financial products worldwide . Different from Libor rate coming in ten currencies, Euribor only presents in Euro . Moreover, Euribor is calculated by disregarding the highest and lowest 15% of all collected values . It is recorded that almost sixty organisations took part in the submission of Euribor, which are bigger and more diversified than Libor . As a result, as few as ten banks would connive to move the benchmark, which becomes more complex . Due to the large-scale of manipulation, many brokers and clearinghouses would support the manipulators by collecting data from various banks and sending the requests back to synchronize with the actions . Therefore, it is asserted that the Euribor rigging primarily implicated individuals than the panel bank itself . Firstly in January 2016, eleven former bankers working for Deutsche Bank, Barclays and Société Générale were prosecuted for conspiring to rig Euribor , six bankers among them appears in a jury trial on September

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