FRANKFURT Feb 8 The European Central Bank said
on Friday that banks should not leave the panel that sets the
Euribor bank-to-bank reference interest rates, saying such rates
played key role for the implementation of its monetary policy.
The future of Euribor has been under scrutiny recently
because of a string of pullouts by banks, including Rabobank
and Citi, looking to protect themselves from any
fallout from the benchmark price-fixing scandal.
"The Eurosystem strongly encourages banks to remain in, or
join, the Euribor panel to prevent potential disruptions to the
functioning of the financial markets while the regulatory
framework is being refined," the ECB said in a statement.
It also said that it welcomed the EU Commission's intention
to propose that banks could be compelled to submit systemically
important reference rates.
Euribor and its larger counterpart Libor are Europe's key
gauges of how much banks pay to borrow from their peers and are
used to set the prices of swathes of financial products, from
some mortgages to more complex derivatives.
They also are a key indicator of financial market tension.
When the financial crisis hit in 2008, interbank rates soared as
trust between banks crumbled.
(Reporting by Sakari Suoninen)