LIBOR Scandal Series#2
KWON HYOK HEE
Hi, guys! I am back with another post on LIBOR scandal! In this post, I would like to show you how the LIBOR scandal is now influencing international financial system. Currently, many countries are going through a variety of investigations on LIBOR interest rates’ manipulation. Why? I’ve actually mentioned this in my first post on LIBOR scandal, but here I will mention just once again. Barclay was short in cash amid the global financial crisis of 2008. You should be saying “ah!” by now! Constrained by the cash shortage, the bank notified a false borrowing rate of interest which was less than the actual rate.
As I have pointed out in the last post, the LIBOR scandal was initiated in England on July 7, 2012. The scandal led to the disgraceful resignation of Barclay’s president, Bob Diamond. Then, how did this scandal become the one influencing all the other international financial and capital markets? LIBOR rate is indeed a kind of treaty between the 16 major English banks under BBA (British Bankers Association). However, LIBOR rate is not only used in England alone, but also widely used for trans-border financial transactions! Now you should know what I am trying to say here! LIBOR rate, with its international use for transactions, affects many of countries around the world. Hence, most of the financial supervisory institutions around the world are investigating LIBOR rates and the related problems.
EU has listed 4 renowned banks (HSBC Holdings of England, Deutsche Bank of Germany, Societe Generale Group of France and lastly Credit-Agricole Bank of France) for investigation. The investigation is to examine any manipulation of EURIBOR interest rates (interest rates between the banks of Euro Zone). In Singapore and the Hong Kong, the government is going through a through verification of choosing methods for SIBOR and HIBOR. In Japan, there is an investigation going on manipulating the TIBOR (interest rates between the banks in Tokyo)! The spokesperson of JBA (Japanese Bankers Association), Aoki Hisanao, ordered 18 banks in Tokyo, such as the Mitsubishi UFJ Bank, to verify the computation process of LIBOR interest rates and submit the results by August 10.
On, September 9, by Bank of England’s lead, most of the renowned banks and global central banks will participate in a meeting in Basel, Switzerland to talk over the problem of LIBOR crisis and fundamental resolutions. Guys, I can’t wait to hear the results of this forum. Let’s wait a little while all together for what’s coming!