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The London Inter-Bank Offered Rate ( Libor ) was an interest rate average calculated from estimates submitted by the leading Bank in London. Each bank estimated what it would be charged were it to borrow from other banks. Q&A: what is Libor and what did Barclays do to it? – CityWire 29 June 2012 at 17:05. It was the primary benchmark, along with the Euribor, for short-term interest rates around the world. Libor was phased out at the end of 2021, with market participants encouraged to transition to risk-free interest rates such as SOFR and SARON.
LIBOR was discontinued in the summer of 2023. The last rates were published on 30 June 2023 before noon UK time. The 1 month, 3 month, 6 month, and 12 month Secured Overnight Financing Rate (SOFR) is its replacement. In July 2023, the International Organization of Securities Commissions (IOSCO) said four unnamed dollar-denominated alternatives to LIBOR, known as "credit-sensitive rates", had "varying degrees of vulnerability" that might appear during times of market stress.
Libor rates were calculated for five currencies and seven borrowing periods, ranging from Overnight rate to one year, and were published each business day by Thomson Reuters. Many financial institutions, mortgage lenders, and credit card agencies set their own rates relative to it. At least $350 trillion in derivatives and other financial products were tied to Libor.
In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the Libor scandal. The British Bankers' Association said on 25 September 2012 that it would transfer oversight of Libor to UK regulators, as proposed by Financial Services Authority managing director Martin Wheatley's independent review recommendations. Wheatley's review recommended that banks submitting rates to Libor must base them on actual inter-bank deposit market transactions and keep records of those transactions, that individual banks' Libor submissions be published after three months, and recommended criminal sanctions specifically for manipulation of benchmark interest rates. Financial institution customers may experience higher and more volatile borrowing and hedging costs after implementation of the recommended reforms. The UK government agreed to accept all of the Wheatley Review's recommendations and press for legislation implementing them.Ainsley Thomson (17 October 2012) "UK Treasury Minister: Government Accepts Recommendations Of Wheatley Libor Review In Full" Dow Jones Newswires / Fox Business
Significant reforms, in line with the Wheatley Review, came into effect in 2013 and a new administrator took over in early 2014. The British government regulated Libor through criminal law and regulatory law laws passed by Parliament. In particular, the Financial Services Act 2012 brought Libor under UK regulatory oversight and created a criminal offence for knowingly or deliberately making false or misleading statements relating to benchmark-setting.
Member banks are international in scope, with more than sixty nations represented among its 223 members and 37 associated professional firms as of 2008. Seventeen banks for example contributed at one point to the fixing of US Dollar Libor. The panel contains the following member banks:
Standard interbank products:
Commercial field products:
Hybrid products:
In the United States in 2008, around sixty percent of prime rate adjustable-rate mortgages and nearly all subprime mortgages were indexed to the US dollar Libor. In 2012, around 45 percent of prime adjustable rate mortgages and more than 80 percent of subprime mortgages were indexed to the Libor. American Municipal bond also borrowed around 75 percent of their money through financial products that were linked to the Libor.LIBOR: Frequently Asked Questions In the UK, the three-month British pound Libor was used for some mortgages—especially for those with adverse credit history. The Swiss franc Libor was also used by the Swiss National Bank as their reference rate for monetary policy.
The usual reference rate for euro-denominated interest rate products is the Euribor, compiled by the European Banking Federation from a larger bank panel. A euro Libor did exist, but mainly for continuity purposes in swap contracts dating back to pre-EMU times. The Libor was an estimate, not intended for the binding contracts of a company. It was, however, specifically mentioned as a reference rate in the market standard International Swaps and Derivatives Association documentation, which were used by parties wishing to transact in over-the-counter interest rate derivatives.
This definition was amplified as follows:
The British Bankers' Association published a basic guide to the BBA Libor, which contains a great deal of detail as to its history and its current calculation.
Libor was actually a set of indexes. There were separate Libor rates reported for seven different maturities (length of time to repay a debt) for each of five currencies. The shortest maturity was overnight, the longest one year. In the United States, many private contracts referenced the three-month dollar Libor, which was the index resulting from asking the panel what rate they would pay to borrow dollars for three months.
Active until June 2023
Inactive from December 2021
Inactive from 2013
Note that the Euro LIBOR should not be confused with EURIBOR.
Active until June 2023
Inactive from December 2021
Inactive from 2013
In September 2008, a former member of the Bank of England's Monetary Policy Committee, Willem Buiter, described Libor as "the rate at which banks don't lend to each other", and called for its replacement. The former Governor of the Bank of England, Mervyn King, later used the same description before the Treasury Select Committee. Q34
To further bring this case to light, The Wall Street Journal reported in March 2011 that regulators were focusing on Bank of America, Citigroup, and UBS. Making a case would be very difficult, because the Libor rate was not determined on an open exchange. According to people familiar with the situation, subpoenas were issued to the three banks.
In response to the study released by the WSJ, the British Bankers' Association announced that Libor continued to be reliable even in times of financial crisis. According to the British Bankers' Association, other proxies for financial health, such as the default-credit-insurance market, are not necessarily more sound than Libor at times of financial crisis, though they are more widely used in Latin America, especially the Ecuadorian and Bolivian markets.
Additionally, some other authorities contradicted the Wall Street Journal article. In its March 2008 Quarterly Review, The Bank for International Settlements stated that "available data do not support the hypothesis that contributor banks manipulated their quotes to profit from positions based on fixings." In October 2008, the International Monetary Fund published its regular Global Financial Stability Review, which also found that, "although the integrity of the U.S. dollar Libor-fixing process has been questioned by some market participants and the financial press, it appears that U.S. dollar Libor remains an accurate measure of a typical creditworthy bank's marginal cost of unsecured U.S. dollar term funding."
On 27 July 2012, the Financial Times published an article by a former trader that stated Libor manipulation had been common since at least 1991.Keenan, Douglas (27 July 2012), " My thwarted attempt to tell of Libor shenanigans". Financial Times. (An extended version of this article is on the author's web site.) Further reports followed from the BBCBBC News (10 August 2012), " Libor scandal: Review finds system 'no longer viable'".BBC News Online (10 August 2012), " Libor review: Wheatley says system must change". and Reuters.Reuters (7 August 2012), "Libor collusion was rife, culture went right to the top". On 28 November 2012, the Finance Committee of the Bundestag held a hearing to learn more about the issue. "Britischer Finanzexperte berichtet von langjährigen Zinssatz-Manipulationen" – in German. More information, in English, is on the trader's web site.[8]
In late September 2012, Barclays was fined £290m because of its attempts to manipulate the Libor, and other banks were under investigation of having acted similarly. Financial Services Authority (FSA) managing director Martin Wheatley called for the British Bankers' Association to lose its power to determine Libor and for the FSA to be able to impose criminal sanctions as well as other changes in a ten-point overhaul plan.
The British Bankers' Association said on 25 September that it would transfer oversight of LIBOR to UK regulators, as proposed by Wheatley and CEO-designate of the new Financial Conduct Authority.
On 28 September, Wheatley's independent review was published, recommending that an independent organisation with government and regulator representation, called the Tender Committee, manage the process of setting LIBOR under a new external oversight process for transparency and accountability. Banks that made submissions to LIBOR would be required to base them on actual inter-bank deposit market transactions and keep records of their transactions supporting those submissions. The review also recommended that individual banks' LIBOR submissions be published, but only after three months, to reduce the risk that they would be used as a measure of the submitting banks' creditworthiness. The review left open the possibility that regulators might compel additional banks to participate in submissions if an insufficient number do voluntarily. The review recommended criminal sanctions specifically for manipulation of benchmark interest rates such as the LIBOR, saying that existing criminal regulations for manipulation of financial instruments were inadequate.Alexis Levine and Michael Harquail (5 October 2012) "Wheatley Review May Mean Big Changes for LIBOR" Blakes Business (Blake, Cassels & Graydon LLP) LIBOR rates could have become higher and more volatile after implementation of these reforms, so financial institution customers could have faced higher and more volatile borrowing and hedging costs.Karen Brettell (28 September 2012) "Libor reform may add volatility, increase some funding costs" Reuters The UK government agreed to accept all of the Wheatley Review's recommendations and press for legislation implementing them.
Bloomberg LP CEO Dan Doctoroff told the European Parliament that Bloomberg LP could develop an alternative index called the Bloomberg Interbank Offered Rate that would use data from transactions such as market-based quotes for credit default swap transactions and Corporate bond.Michelle Price "Libor tender puts focus on data providers" , "Financial News", 28 September 2012Ben Moshinsky and Lindsay Fortado "U.K. Lawmakers Seek Speedy Overhaul of Libor Following Review", "Bloomberg News", 28 September 2012
On 27 June 2012, Barclays Bank was fined $200m by the Commodity Futures Trading Commission, $160m by the United States Department of Justice and £59.5m by the Financial Services Authority for attempted manipulation of the Libor and Euribor rates. The United States Department of Justice and Barclays officially agreed that "the manipulation of the submissions affected the fixed rates on some occasions".Taibbi, Matt, Why is Nobody Freaking Out About the LIBOR Banking Scandal? , Rolling Stone, 3 July 2012 On 2 July 2012, Marcus Agius, chairman of Barclays, resigned from the position following the interest rate rigging scandal. Bob Diamond, the chief executive officer of Barclays, resigned on 3 July 2012. Marcus Agius was to fill his post until a replacement was found. Jerry del Missier, chief operating officer of Barclays, also resigned. Del Missier subsequently admitted that he had instructed his subordinates to submit falsified LIBORs to the British Bankers Association.
By 4 July 2012, the breadth of the scandal was evident and became the topic of analysis on news and financial programs that attempted to explain the importance of the scandal. Capitalism Without Failure coverage of a discussion among Matt Taibbi, Eliot Spitzer, and Dennis Kelleher on Viewpoint with Eliot Spitzer on 4 July 2012 regarding the emerging LIBOR Scandal On 6 July, it was announced that the UK Serious Fraud Office had also opened a criminal investigation into the attempted manipulation of interest rates.
On 4 October 2012, Republican US Senators Chuck Grassley and Mark Kirk announced that they were investigating Treasury Secretary Timothy Geithner for complicity with the rate manipulation scandal. They accused Geithner of knowledge of the rate-fixing, and inaction which contributed to litigation that "threatens to clog our courts with multi-billion dollar class action lawsuits" alleging that the manipulated rates harmed state, municipal, and local governments. The senators said that an American-based interest rate index would be a better alternative and that they would take steps towards creating one.HITC Business (4 October 2012) "Senators Launch Investigation Into Treasury Secretary Geithner’s Involvement In Libor Manipulation" ( FOX Business)
At leat 19 individuals were subsequently convicted in the United Kingdom and United States on charges of conspiring to commit fraud. However, the US Court of Appeals for the Second Circuit in 2022 overturned the convictions of Matthew Connolly and Gavin Campbell Black on the grounds that the cases had not demonstrated that the manipulated Libor submissions were in fact false submissions. United States v. Connolly, No. 19-3806 (2d Cir. 2022), Justia This led to other similar convictions in the United States being overturned. In the United Kingdom, the Supreme Court on 23 July 2025 allowed the appeals of Tom Hayes (originally convicted in 2015) and Carlo Palombo (2019), saying their convictions were unsafe because "It was wrong for the judge to direct the jury that, if the submitter took any account of the commercial interests of the bank or a trader, the rate submitted was for that reason not a genuine or honest answer to the question posed by the LIBOR definitions as a matter of law". City traders have rate-rigging convictions quashed, BBC News 23 July 2025
The Danish, Swedish, Canadian, Australian, and New Zealand Libor rates were terminated.
From the end of July 2013, only five currencies and seven maturities were quoted every day (35 rates), reduced from 150 different Libor rates – 15 maturities for each of ten currencies, making it more likely that the rates submitted were underpinned by real trades.
From the beginning of July 2013, each individual submission that came in from the banks was embargoed for three months to reduce the motivation to submit a false rate to portray a flattering picture of creditworthiness.
A new code of conduct, introduced by a new interim oversight committee, built on this by outlining the systems and controls firms had to have in place around Libor. For example, each bank had to have a named person responsible for Libor, accountable if there is any wrongdoing. The banks had to keep records so that they could be audited by the regulators if necessary.
In early 2014, NYSE Euronext took over the administration of Libor from the British Bankers Association. The new administrator was NYSE Euronext Rates Administration Limited, a London-based, UK registered company, regulated by the UK's Financial Conduct Authority.
On 13 November 2013, the Intercontinental Exchange (ICE) Group announced the successful completion of its acquisition of NYSE Euronext. As a result of this acquisition, NYSE Euronext Rate Administration Limited was renamed ICE Benchmark Administration Limited. The appointment of a new administrator was a major step forward in the reform of LIBOR. ICE Benchmark Administration Ltd take responsibility for administrating LIBOR ,
The scandal also led to the European Commission proposal of EU-wide benchmark regulation.
Following its cessation, industry publication Financial News noted there were "an army of bankers, lawyers and traders" devoted to working on the transition that would need to change their focus given the switch to a new benchmark, even as there would be other jurisdictions and currencies moving off other inter-bank lending rates in years ahead.
According to a March 2021 estimate, major banks would have to spend more than US$100 million (~$ in ) transitioning away from LIBOR. From January 2022, Libor could not be used as the reference rate in any new derivatives contracts, loans, and credit card offers.
A variety of replacements for LIBOR have been offered. In some cases, banks allow their customers to choose which rate to track.
In 2016, the ARRC released its first report on the possible indices that could serve as a replacement to the LIBOR.
On March 7, 2018 the ARRC announced that the committee had been reconstituted and the following groups were participating.
The ARRC would comprise the following institutions:
In addition, the following agencies would serve as ex officio members of the ARRC:
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