As I wrote in my article in the Times of Malta on 21
November 2017, the London Interbank Offered Rate, Libor, (which
measures the cost of unsecured borrowing between banks for a
specific period) is expected to be phased out by 2021 and given its
widespread use, this is proving to be a gargantuan
task.
The effort to extinguish Libor is driven mainly by regulators
who favour benchmarks based on real trades rather than benchmarks
based on banks' estimates, since the latter may be subject to
bias and fraud; in fact recent scandals of benchmark rigging have
lead to the imposition of hefty fines (approximately £1.5
billion in the UK in 2014) and even prison sentences in some
instances.
