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Published: 23 july 2012 16:43

Lithuania's central bank says to be following LIBOR-fixing scandal closely

Lietuvos banko būstinėje
Juliaus Kalinsko / 15min nuotr. / Bank of Lithuania

The Bank of Lithuania says that it is following the developments in LIBOR-fixing scandal closely but has not joined the discussions on modifications to the calculation of VILIBOR, the Vilnius Interbank Offered Rates, for the meantime, the Verslo Žinios business daily reports.

Although it is a well established practice in Lithuania to use EURIBOR as a reference rate for euro-denominated loans, some large banks also use LIBOR as a benchmark.

“Any scandals over manipulations on financial markets undermine confidence in the financial system and disrupt its smooth functioning, once the allegations are proved. Interbank interest rates LIBOR are one of the most important benchmark interest rates in the world, hence any agreement to make bigger changes to the calculation of LIBOR would also lead to a review of methodology used to calculate other interbank interest rates,” the representatives of the central bank told the daily.

Financial markets appreciated stability of calculation methodology hence the regulators avoided any frequent and in particular sudden changes thereto, they said.

According to the daily, Lithuania’s banks use EURIBOR rates as reference rates for euro-denominated loans in most cases but some banks, including the country’s largest commercial bank SEB Bankas, often use LIBOR rates as a benchmark. The bank’s representatives explained that this was “a historical development”.

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