Bank of England deputy governor Paul Tucker has called for the Government to outlaw any index in the interbank markets which allows banks to self-certify their borrowing costs.
At an Treasury select committee hearing on the rate-fixing scandal today, Tucker was asked whether he could think of any other fixings in the inter-bank market which could have been manipulated during the financial crisis.
Tucker did not name an index in particular but called for the Government to insist all interbank indexes should be based on “real transactions”, rather than lenders’ estimates.
He said: “We think as part of the review the Government has commissioned with [FCA chief executive designate] Martin Wheatley, as well as looking at Libor they should look at every single index which is not based on real transactions, where participants in the market have to self-certify, that plainly does not work.
“Even if these other markets have been completely clean – and we have no information on that one way or the other – self-certification is plainly opened to abuse and could occur elsewhere.”
Last week, the Bank of England was dragged into the Libor scandal when Barclays released a memo claiming Tucker had told Diamond in 2008 that a number of “senior Whitehall officials” had expressed concerns over the Libor numbers being reported by Barclays.
Following this, the Bank of England released a statement on behalf of Tucker stating he wished to attend a TSC hearing to give evidence on the matter.