What will the Libor review entail?

Q Why is the government in such a hurry to review the Libor rate?

A The Treasury admits four weeks is a “challenging” timeframe. But it wants to feed the review’s conclusions into legislation that is currently before parliament.

Q Who is leading the review and what format will it take?

A Martin Wheatley, managing director of the FSA, will receive written evidence and “actively engage” with stakeholders.

Q Could the British Bankers’ Association lose control of the Libor rate?

A Possibly. The review will consider making Libor-setting a regulated activity, ask whether it is possible to use actual trade data to calculate the rate and look at how to transfer setting of the rate to a “new regime”.

Q How will it affect punishments for those who abuse rates such as Libor?

A Part of the inquiry will look at whether the UK’s existing financial misconduct powers are sufficient to cover abuse of rates such as Libor.

Q How will this affect other interbank lending rates?

A Wheatley will be asked to consider whether there should be reforms of “other price-setting mechanisms” in the financial markets.