21.02.2012
Euribor and Libor

European Supervisory Authorities want to prevent interest rate manipulations

In light of manipulations of Libor and Euribor, the European Banking Authority (EBA) and the European Markets and Securities Authority (ESMA) published joint recommendations for benchmark- setting processes in the European Union. The GDV finds these proposals appropriate for the prevention of future manipulations.

The objective of these recommendations by EBA and ESMA is to overcome current weaknesses and inadequacies of Euribor’s indexation mechanism.

Specific aspects are amongst others:

  • Greater independence of the steering committee from the banking industry
  • Cutting the amount of Euribor indices in half
  • Improvements to the Euribor definition

In order to ensure the efficiency and robustness of financial data, the Euribor definition should focus on transaction data, e.g. three-monthly refinancing operations. Furthermore, alternative approaches to establish a reliable indicator for the interbank rate are possible.

The GDV’s complete position paper is available in the download section.

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on ESMA and EBA Consultation paper on Principles for Benchmarks-Setting Processes in the EU

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