|The LIBOR money-market rates, widely used around the world as the benchmark for interest rates on mortgages, credit cards and billions of dollars worth of other financial transactions, will be cleaned up and subject to substantial new regulations under official proposals announced Friday. But the way the rates are set won't fundamentally change, and they will continue to be based on bankers' estimates as much as real market transactions.
British regulators will step in to set tough new rules for the system, replacing ineffective self-regulation by the British Bankers' Association but the regulators won't run the rate-fixing process. Instead, that will be outsourced to an independent body. And the whole process will be streamlined to reduce the number of currencies and rates that are set on a daily basis.