German BaFin argues for Libor benchmark calculation changes

After Libor and Euribor, recent FX rates manipulation probes, EU regulators seem to be toughening up

Over the weekend German financial regulator BaFin has announced that it would be in the interest of the financial markets to conduct a thorough reform to the setting of financial markets benchmarks such as Libor. Chief Executive Director Raimund Roeseler has told Welt am Sonntag in an interview that reference prices that are based on more or less random estimates are not sound.

He proceeded to suggest that the most relevant figures need to be checked by a government body and should not be left to the sole discretion of the market participants. The talk is evidence of growing anxiety by global regulators following the Libor fixing scandal and following the 4pm FX fix manipulation investigations we could see an even more pronounced discontent with the benchmarks that are currently widely adopted by markets worldwide.

As the European Commission has launched its own inquiry into currency rates manipulation and the ECB’s board member Joerg Asmussen stating openly that he is supporting German Finance Minister Wolfgang Schaeuble in his suggestion that governments across the EU should keep investigating the banking sector this seems to be a theme that is here to stay.

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