The Market Has Spoken, and It Is Rigged (Simon Johnson)

[dipsydoodle]

2. Of course Barclays could not have manipulated those rates by themselves

For example :16 banks set Libor daily for the £ - its the rate that each is prepared to pay the others to lend to cover cash shortfalls against cash surpluses. The top and bottom 4 figures are excluded and then an average is taken of the remaining 8. Similar occurs for other currencies.

Anyone who needs to ask the question why banks would borrow from each probably wouldn't understand the answer although searching might help them.

Other than when Barclays constantly bid high, and as such were constantly excluded , most references to the subject concern artificial lowering of the rate to support individual banks own balance sheets at the expense of profits. Fraud was involved in this mainly when traders knew in advance , with the complicity of others , whether the rate was likely to move up or down.