For many years, the setting of interest rate, such as LIBOR and SIBOR, were left to the banks, working under the association.
Recently, there were scandals that there were dishonesty in fixing the rates in London, and that some banks were posting fictitious rates and benefiting from their acts by trading on these false rates. Apparently, there were similar abuses in other countries.
The Association of Banks in Singapore has recommended that the Monetary Authority of Singapore should be involved in the fixing of the rates.
I support this move, as there a neutral and responsible body should take the responsibility in overseeing this activity. While it may be challenging, the responsibility cannot be delegating to interested parties, such as the banks.
I hope that the recent scandals in several fields around the world underlines the need for regulators to play a more active role, instead of leaving matters to the market or to the participants with vested interest.
Recently, there were scandals that there were dishonesty in fixing the rates in London, and that some banks were posting fictitious rates and benefiting from their acts by trading on these false rates. Apparently, there were similar abuses in other countries.
The Association of Banks in Singapore has recommended that the Monetary Authority of Singapore should be involved in the fixing of the rates.
I support this move, as there a neutral and responsible body should take the responsibility in overseeing this activity. While it may be challenging, the responsibility cannot be delegating to interested parties, such as the banks.
I hope that the recent scandals in several fields around the world underlines the need for regulators to play a more active role, instead of leaving matters to the market or to the participants with vested interest.
4 comments:
[MAS relooking into setting of market interest rate benchmark]
"Singapore's central bank reiterated that it is taking a 'fresh look' into the setting of market interest rate benchmarks."
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1220333/1/.html
[Explaining the Libor scandal]
http://www.bbc.co.uk/news/business-19199683
[Q&A: Barclays and bank rates]
"Does Libor affect my mortgage?"
"How could the actions of Barclays' traders affect me?"
http://www.bbc.co.uk/news/business-18613988
The MAS or some other agency may appear "neutral".
But who are the people sitting on the board? Even ex bankers are shifted around from one agency to another like musical chairs.
And all have vested interests.
Transparency is key in current climate. Many institutions have creditability issues, local or global.
There are few people practising a code of conduct that is respected by all. Honest people are few.
The pursuit of money is so encompassing that nothing else matters. In this regard, the scientists at NASA's Jet Propulsion Laboratory ( JPL ) seems to have achieved an honest and commendable feat: Landing a 1000kg vehicle on mars remotely.
They seem to be the only ones I can look up to with great respect for their skill, planning and execution.
Those scientists(at NASA) whose ambitions are to meet Martians, their beliefs are anchored to principle NOT everchanging value system and fickle opinion.
Anchoring is critcal but unfortunately our education system teaches "values" NOT the importance of "principles". All things go "haywire" as a result.
Dear Mr Tan
Can you help to explain:
1. The relationship between LIBOR and SIBOR?
2. Some home mortgage rate package in terms of SOR rate.
Does changes in LIBOR will cause corresponding change in SIBOR and SOR rate?
Thank you
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