LONDON — Reliance on the Libor interest rate benchmark in setting mortgages, credit card loans and other contracts across the world poses a risk to the financial system, the Bank of England said on Tuesday. In minutes published on Tuesday of its Sept. 20 Financial Policy Committee meeting, officials gave their bluntest warning yet about concerns over the continued use of Libor to underpin $350 trillion in contracts, despite reforms to make it safer. A rigging scandal over the rate, which is used to settle contracts globally, erupted in 2012 when Barclays became the first of many banks to be penalised for manipulating it, chalking up fines that cumulatively ran into billions of pounds. Members of the FPC reached their conclusion about Libor at their March meeting - but were so concerned about how this could affect markets that they delayed publication of it until Tuesday. Advertisement Continue reading the main storyWhile acknowledging that steps were being taken to mitigate the risk, the FPC concluded that "market reliance on the Libor benchmark created a financial stability risk," the record the September meeting showed.

Source: New York Times October 03, 2017 11:30 UTC