The Developments Of Libor / Euribor Scandals

1182 Words Apr 10th, 2016 5 Pages
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, Thompson Reuters, on behalf of the British Bankers ' Association (BBA), was responsible for calculating and issuing Libor . Every morning, the BBA asked sixteen panel banks to individual submit their interest rates around 11.00 London time, eliminated four highest and four lowest values equivalent 25% . The average of remaining values was published as the official Libor for that day . Accordingly, at least five banks colluding could rig the Libor rate .
In the period of 2005 to 2011, several panel banks submitted artificial rates to the BBA, for example, Barclays manipulated from January 2005 to July 2008, UBS submitted artificial quote from 1st January 2005 to 31st December 2010, the Royal Bank of Scotland October acted from 2006 to November 2010…

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