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Reddy's Libor reckoner

Business Standard  |  New Delhi 

The Libor rate-fixing scandal erupted on June 27, when the UK's Financial Services Authority (FSA) imposed the equivalent of a $450-million fine on Barclays Bank. There's someone in India who knew about the scandal at least three days earlier. Y Venugopal Reddy, former Reserve Bank of India governor, was delivering the Per Jacobsson Foundation Lecture at the Bank of International Settlements in Basel, Switzerland, on June 24. He had this to say in a section on restoring trust in the financial sector: "...In the discharge of semi-fiduciary functions that are critical to the integrity of financial markets, such as fixation of Libor and credit rating, the major global players in financial markets discredited themselves by resorting to questionable practices." Asked how he knew such market-sensitive information about the Libor scandal several days before the FSA announced its decision, Reddy says: "The moment investigation started, I knew that the well-known secret about manipulation of Libor will be out." Note the phrasing about the "well-known secret" and the reference to the "major global players" in plural.

First Published: Tue, July 10 2012. 00:19 IST