LIBOR, EURIBOR and the regulation of capital markets: The impact of Eurocurrency markets on monetary setting policies

Ojo, Marianne (2012): LIBOR, EURIBOR and the regulation of capital markets: The impact of Eurocurrency markets on monetary setting policies. Published in: Journal of Strategic Change, John Wiley & Sons Ltd (2014)

Abstract

What factors and developments have fuelled the „cartelisation“ of capital markets? - to the extent of the rigging of EURIBOR and LIBOR rates? In what ways can EURIBOR and LIBOR rate rigging practices be addressed?

How and why have offshore markets expanded to the degree and extent to which they exist today – this partly being explained through the multiplier effect, as well as the fact that onshore (national) regulations have boosted and facilitated the growth of offshore financial centers? This paper is not only aimed at addressing these issues and developments, but also highlights why (even though) the need for de regulation of national capital markets is justified, the converse appears to apply to the liberalisation of external capital markets. Furthermore, the liberalisation of global and external capital markets has provided the impetus and justification for the need to de regulate national capital markets.

The need and concern for increased regulation of bond, equity markets, as well as other complex financial instruments which can be traded in OTC (Over- the-Counter) derivatives markets is evidenced by Basel III's focus. „Cartelisation“ and organised activities relating to rate rigging in global capital markets have been evidenced recently by sophisticated EURIBOR and LIBOR rate rigging practices and occurences.

• Item Type: MPRA Paper
• Language: English
• Keywords: EURIBOR (Euro Inter-Bank Offered Rate); LIBOR (London Inter-Bank Offered Rate); de regulation; monetary policies; rate rigging; equity; bond markets; derivatives; capital markets; liberalisation
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E02 - Institutions and the Macroeconomy; D - Microeconomics > D0 - General; K - Law and Economics > K2 - Regulation and Business Law; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; G - Financial Economics > G0 - General > G01 - Financial Crises

References

Bank for International Settlements, Progress Report on Basel III Implementation October 2012 <http://www.bis.org/publ/bcbs232.htm>

COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS of the EUROPEAN PARLIAMENT Public Hearing on Tackling the culture of market manipulation, Sept 2012

D'Arista, J. „Financial Regulation in a Liberalized Global Environment“ in International Capital Markets : Systems in Transition (eds J Eatwell and L Taylor) 2002, University of Cambridge

ECB, „Monetary Policy at Crisis Times“, Lecture by Peter Praet, Member of the Executive Board of the ECB, at the International Center for Monetary and Banking Studies, Geneva, 20 February 2012 <http://www.ecb.int/press/key/date/2012/html/sp120220.en.html>

Financial Executive, „The Role of the Fed Reserve „ March 2012 <http://www.financialexecutives.org/KenticoCMS/Financial-Executive-Magazine/2012_03/The-Role-of-the-Federal-Reserve.aspx the Fed Reserve>

Finance Watch, „Finance Watch Response to Parliament on LIBOR and EURIBOR“ <http://www.finance-watch.org/2012/09/finance-watch-response-to-parliament-on-libor-and-euribor/>

Global Research, „Libor Scandal Exposes Banks’ Rigging of Global Rates“ <http://www.globalresearch.ca/libor-scandal-exposes-banks-rigging-of-global-rates/31783>

Merco Press, „Euro zone to Tighten Financial Regulation following the Libor Rigging Scandal“ <http://en.mercopress.com/2012/07/09/euro-zone-to-tighten-financial-regulation-following-the-libor-rigging-scandal>

Spiegel, „The Cartel Behind the Scenes in the Libor Interest Rate Scandal“ <http://www.spiegel.de/international/business/the-libor-scandal-could-cost-leading-global-banks-billions-a-847453.html>

Treasury Today, „LIBOR Troubles: What Should You be Doing?“ <http://treasurytoday.com/2012/07/libor-fixing>