Bank of England governor Mark Carney has called for an alternative to Libor based on market transactions not banks’ judgements.
Carney told the Bank of England’s Roundtable on Sterling Risk Free Interest Rates that Libor rate submissions were now much tighter, Reuters reports.
However, he said a situation where “a judgment-based benchmark underpinned an estimated $350trn-worth of contracts was not desirable.”
“The Governor finished by noting that a shift towards robust, fully transaction-based reference rates was necessary and, over time, would happen,” minutes from the meeting show.
The Libor rate has been vulnerable to manipulation resulting in billions of dollars of fines for a number of major banks.
The roundtable took play on 6 July, but minutes were only released this week.