Libor Rate Scandal Raises Credibility Questions, But Standard Unlikely To Be Replaced

LONDON, July 6 (Reuters) – A scandal over the rigging of the Libor interest rate that underpins financial contracts worth hundreds of trillions of dollars is likely to force regulators to reform the way it is set.

But any decision they take will, at best, be a compromise rather than a solution that will fully restore the reputation of what is often referred to as the world’s most important financial instrument, many market participants believe.

Libor’s credibility was severely damaged during the 2007-2009 financial crisis as some of the banks contributing to its daily fixings were accused of manipulating the rate.

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