spokesperson said in a statement that “in the context of our market monitoring following the onset of the financial crisis in late 2007, involving thousands of calls and emails with market participants over a period of many months, we received occasional anecdotal reports from Barclays of problems with Libor (Huffington Post, 2012) . This illustrates that the Federal Bank were aware of the flaw but didn’t take appropriate action towards LIBOR Concerns. Moreover, I believe they did not react for the hope of an economic resurgence. As the financial crash resulted in low “self-esteem” market, The LIBOR value deprecating would nullify this depression and restore the global economy. This benefited Governments around the world, as an impression of alleviating financial markets from disarray, which boosts public confidence in the marketplace.
Despite this, the fluctuation of LIBOR had a massive effect on businesses, investors and ordinary individuals. LIBOR increased proportionately with an increase in the cost of borrowing. The consequences of increasing borrowing costs were passed onto consumers by increasing debt and mortgages. However, investors benefit as savings increase. LIBOR decreasing correlated with a decrease in savings, whilst showing good signs for mortgage holders. Although, individuals believe a decrease in interest rate means paying less on consumer contracts, such as mortgages and credit cards – this contrasted with the occurrence of interest swaps and LIBOR fluctuating both upwards and downwards. Overall, ordinary individuals suffered as the Local Government would lose more money. Services that people benefit from, such as schools, hospitals, fire departments and public services, have placed their money in adjustable rate mortgages, currencies, mutual funds, pensions and derivatives (MGA, 2012). Manipulating the rates has resulted in Banks not pumping profits into these financial instruments. And poorer people with bad credit profiles are disproportionately affected. In Ohio, for example, 90 percent of all subprime mortgages in 2008 were indexed to Libor, double the proportion for prime loans (Liam Vaughan, 2017). Traders on the other end of the transaction also lose out. As Banks collude with each other, it is evitable that some Bank reaps the reward of capitalizing on the manipulation, whilst the other banks and traders must fall victim for the meantime. Due to the vast importance of LIBOR, a tiny manipulation in the wrong direction could result in trillions of pounds being lost.

Critical Evaluation of LIBOR Reforms

Wheatley’s proposal on reform recommendations have been implemented since and have proved successful in maintaining and preventing future manipulation in LIBOR. One of his recommendation’s including the ratification of replacing the British Banking Association as the LIBOR administrator, with the ICE Benchmark Administration (IBA).
Wheatley insisted that banks should submit actual transactions, rather t