Taken from the real-world economics review, issues no.47
What is in the number? The importance of LIBOR
The first paragraph (see above), on page 242 caught my attention: LIFFE (London International Financial Futures Exchange), whose contracts are historically linked to LIBOR, experienced volatile moves in the Sterling overnight market. This was primarily in two things called EONIA and SONIA (we are likely to hear more of this during the inquiry).
I’m currently looking for news sources, to see if this was public knowledge, but the Bank of England put ‘pressure’ to bring some normality in the market. The volatile and ‘unruly’ moves were influenced by the positions of big banks. Please not, this occurred before the reputed direct manipulation of the LIBOR rate itself.
It begs the question: why did the BoE reforms fail and big banks were able to influence the overall LIBOR rate a year later?







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