Report

LIBOR: origins, economics, crisis, scandal, and reform


Abstract: The London Interbank Offered Rate (LIBOR) is a widely used indicator of funding conditions in the interbank market. As of 2013, LIBOR underpins more than $300 trillion of financial contracts, including swaps and futures, in addition to trillions more in variable-rate mortgage and student loans. LIBOR's volatile behavior during the financial crisis provoked questions surrounding its credibility. Ongoing regulatory investigations have uncovered misconduct by a number of financial institutions. Policymakers across the globe now face the task of reforming LIBOR in the aftermath of the scandal and crisis.

Keywords: LIBOR; financial crisis; scandal; interbank; banking; reference rate; interest rate;

JEL Classification: G01; G12; G15; G18;

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Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2014-03-01

Number: 667