FSB's Carney wants Libor reform tackled by spring 2014

Thu Apr 18, 2013 4:15pm EDT
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By Louise Egan and William Schomberg

WASHINGTON, April 18 (Reuters) - Global regulators will provide more clarity in a year's time on guidelines for financial benchmarks like Libor, Bank of Canada Governor Mark Carney said on Thursday, after a global rate-rigging scandal led to calls for reform of the system.

Carney, also head of the Financial Stability Board (FSB), which coordinates financial regulations worldwide, said the FSB might have a coordinating role in ensuring that any reforms to reference rates around the world live up to standards of transparency and good governance.

When asked how long it would take, he said it would probably be done by "next spring."

"I suspect this will consume a fair bit of time, and appropriately so, over the next year or so," he said at a Reuters Newsmaker event in Washington.

Authorities have probed more than a dozen banks in Europe, Japan and the United States over suspected rigging of the London interbank offered rate, or Libor, used in financial contracts worth hundreds of trillions of dollars globally.

Barclays, Royal Bank of Scotland (RBS) and UBS have all been fined for rigging the Libor rate, and authorities are investigating a wide variety of other benchmark rates.

Carney said it was ultimately up to the private sector to decide whether to change the rate-setting system, with policymakers setting the bar for good conduct.

"We have to look at whether there are alternatives - the collective we - and we have to look at the potential costs and mechanisms for transition and if they are clearly superior," he said.   Continued...