THE EUROPEAN Union is seeking to take control of the benchmark Libor interest rate away from the City and hand it to a Parisian financial watchdog, it emerged last night.
Libor, which stands for the London interbank offered rate, could soon be administered from an office beside the Seine under a powergrab by EU commissioner Michel Barnier that would see all key financial benchmarks run at a continental level.
Matthew Elliott, chief executive of the Business for Britain campaign group, said it was “another example of the EU unfairly targeting the City of London”.
“Britain and British business has a very different set of needs to the Eurozone and absurd decisions like this will only harm jobs and growth in this country,” he added.
Barnier’s draft proposals set out plans to “establish a framework for the supervision of benchmarks, with penalties for non-compliance with established principles”, according to a spokeswoman.
The France-based European Securities and Markets Authority would then have control over all key international benchmarks.
UK regulators are already preparing their own Libor replacement after traders were found to have manipulated the rate.
Last night a Treasury source insisted to City A.M. that the UK government is “quite relaxed” about the proposals and said the European Commission recognises Britain’s role “as a leader in the debate around benchmark manipulation”.