This submission provides a brief commentary and timeline of the events, together with the supporting documents.
In 2008, the Bank of England worked closely with the Federal Reserve Bank of New York (FRBNY) and the Financial Services Authority (FSA) to input into the BBA Review of the Libor system. The Bank of England and other central banks were concerned to influence the outcome of the BBA Review. Because the Libor system was, and is, a private sector arrangement and was not subject to financial regulation, it was not appropriate for the public authorities to endorse or determine the outcome of the BBA Review. When the amended proposals were adopted in December 2008, the Bank was not aware of any dissenting views expressed by the official or private sectors.
In reading these documents, it is important to distinguish between three issues. First, allegations of wrongful behaviour by Libor panel banks. Second, concerns about the operation of the Libor process in times of market stress. Third, the need for any system based on self-reporting to be alert to the possibility of “accidental or deliberate misreporting”, as referred to in the Geithner memorandum.
The broad outline of events is as follows:
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From May 2008, the Bank of England encourages the BBA to conduct a global review of Libor and banks to engage with the review at a sufficiently senior level. It also begins to discuss these issues with the FRBNY.
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The Bank considers the points in the Geithner memorandum and ensures that those points are taken on by the BBA.
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The Bank and the Federal Reserve work closely together behind the scenes to influence the consultation paper issued by the BBA on 10 June, 2008.
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The Bank also continues to work on influencing the outcomes after the consultation paper is published until the BBA publishes its final report on 18 December 2008.
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