• Kyodo


The Financial Services Agency has urged major banks to check their internal supervisory systems to prevent manipulation of interbank lending rates following the scandal overseas involving Libor, agency officials said.

The financial industry watchdog has requested around 20 Japanese and foreign banks to report on their systems to oversee units in charge of calculating the Tokyo Interbank Offered Rate (Tibor) and the London Interbank Offered Rate (Libor), the officials said Wednesday.

Tibor is a daily reference for short-term interest rates calculated on the basis of rates offered by lenders in Japan for interbank loans maturing in one week to 12 months.

In the recent Libor scandal, global banks tried to manipulate the rate, which serves as the benchmark for derivatives, loans and mortgages around the world, by underreporting their borrowing costs to minimize the perception of stress in financial markets in 2007 and 2008.

Banks can benefit by manipulating Libor by signaling that they were financially healthier than they actually were by offering low rates.

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