I recommend in my report that international authorities should take forward a discussion of existing applications of interbank rates such as LIBOR, the merits of alternative reference rates for certain applications, and the role – if any – that the authorities should play in facilitating transition to these reference rates for future contracts.
In the first instance I believe that this discussion should be guided and co-ordinated by the Financial Stability Board (FSB), working in conjunction with IOSCO, the European Commission and other interested international institutions such as the Bank of International Settlements.

Implications for Other Benchmarks
While today is about LIBOR, it is of course only one of a number of important benchmarks that are used in contracts around the world. And some commentators have already put the spotlight on other major international benchmarks, for example there has already been a substantial amount of work on Price Reporting Agencies in the oil market, led by IOSCO.
Further, there are a large number of other important benchmarks in other commodity markets – for example for the prices of agricultural products and precious metals – and in the equity, bond and money markets, which have not yet been re-assessed, but which may need to be looked at given the current scrutiny of benchmarks.
Whilst other benchmarks vary greatly in design and application, I hope that those responsible for them will be able to draw some important lessons from my report on LIBOR, and that it will help stimulate wider debate on benchmarks.
In particular, I consider that it should be possible to develop a set of overarching principles that can be applied to all major benchmarks, to promote robustness and credibility across the markets. In my report I have set out some basic features that in my view any major benchmark should have .
Many of these benchmarks are compiled in different parts of the world, and many are applied to contracts all over the world, so naturally I would expect that any such work is co-ordinated at the international level. My Report outlines the various pieces of work that are already underway in different parts of the world.
As many of you will know, Gary Gensler, Chairman of the Commodity Futures Trading Commission, and I will co-chair an IOSCO task force. We believe this task force will provide a useful vehicle to help advance this important work. Crucially, this IOSCO task force will be informed by the European Commission's work on Regulation of Indices, as well as IOSCO's Principles for Oil Price Reporting Agencies.
The European Commission has launched another important strand of work on the use and possible regulation of major benchmarks in Europe.
It is only through team work and collaboration that the various authorities and bodies will develop effective and lasting solutions to these issues.
I look forward to working with Chairman Gensler on this crucial aspect of international work; as well as with other international institutions such as the Financial Stability Board and key European institutions.
Domestically, my report also considers some examples of other important benchmarks that are UK-related and recommends that further work be taken forward by the UK authorities with respect to benchmarks that are compiled in the UK or relate to Sterling products.

Concluding Remarks
In closing, I would like to reflect on the range of issues covered today.
The evidence backs a strong case for reforming LIBOR.
Governance of LIBOR has completely failed resulting in the sort of shameful behaviour that we have seen. This problem has been exacerbated by a lack of regulation and a comprehensive mechanism to punish those who manipulate the system.
That is why I am recommending that the FSA is given clear and extensive powers to ensure that regulation is able to cover the offences, and that there is enough clout to punish those who break the law.
But this regulatory foundation must serve as the last line of defence, behind an overhauled governance structure, with a new, independent body, backed by a clear code of conduct, with clear rules and procedures regarding submission.
These changes will ensure that the market can once again have confidence in LIBOR going forward, and that the public both in Britain and abroad, are reassured that this problem will not happen again.
There is still much work to be done on an international level in regard to the appropriate use of benchmarks in all markets, and the appropriate rules and regulations that should be applied. I encourage those bodies to consider and respond to this report.
Together, we need to get this right so that people and businesses can depend on a system that works, with good regulatory oversight, governance and reliable information. I submit this review to the Government for its consideration, and look forward to their response in due course.

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