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Federal Reserve Bank of New York
Staff Reports
LIBOR: origins, economics, crisis, scandal, and reform
David Hou
David R. Skeie
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.


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David Hou & David R. Skeie, LIBOR: origins, economics, crisis, scandal, and reform, Federal Reserve Bank of New York, Staff Reports 667, 01 Mar 2014.
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Keywords: LIBOR; financial crisis; scandal; interbank; banking; reference rate; interest rate
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