Finance chiefs want a bigger range of rates

Tim Wallace
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GLOBAL finance chiefs yesterday called for the public and private sectors to create more reference rates, arguing measures like Libor are solely focused on bank credit risk and do not reflect the markets’ other needs.

The report argued Libor and other similar measures fail to pass on monetary policy changes in times of stress, showing rising funding costs at a time when central banks are cutting rates.

Staff from 13 central banks worked on the report under a unit of the Bank of International Settlements, arguing regulators should play a bigger role in designing common principles for any new benchmarks.

And the group suggested central banks push for rates to be based on very transparent information in future, in part because the opaque nature of Libor setting allowed its manipulation.