German Bafin wants bigger govt role in setting market benchmarks

FRANKFURT Sat Dec 7, 2013 8:00pm EST

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FRANKFURT Dec 8 (Reuters) - German banking watchdog Bafin is calling for far-reaching reforms in the setting of market benchmark values such as Libor, its head of banking supervision told a German paper, arguing for a more active government role.

"Reference prices that are only based on more or less random estimates are not sound," Raimund Roeseler told Welt am Sonntag in an interview for publication on Sunday.

"The most relevant figures also need to be checked by a governmental body. It should not be left to the private sector alone," he added.

The remarks come after the EU Commission earlier this week slapped a record 1.7 billion euro ($2.3 billion) fine on six financial institutions, including Deutsche Bank, for manipulating the London Interbank Offered Rate (Libor) and its euro equivalent Euribor.

The two interest rate benchmarks are used to help price trillions of dollars of financial contracts globally.

The European Commission is also studying information about possible manipulation of foreign exchange markets, even though no decision has been made about whether to open a formal investigation.

"Currently, there is no indication that German institutes did participate in manipulation on the foreign exchange markets," Roeseler said.

Over the weekend, European Central Bank board member Joerg Asmussen backed German Finance Minister Wolfgang Schaeuble's call for governments to keep scrutinising the banking sector despite complaints that they had already gone far enough.

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