Draghi: Libor case undermines financial confidence; a lot needs to be done

As reported by Bloomberg,

European Central Bank President Mario Draghi said that revelations about the setting of the Libor, or London offered interbank rate, undermine confidence in the the world’s financial system, according to an interview with French newspaper Le Monde. 

Rebuilding the financial-services industry after the crisis requires “lots to be done,”....

Regular readers know that there is 'lots to be done' to restore confidence in the global financial system.

Specifically, they know that restoring confidence requires that transparency be brought to all the currently opaque corners of the financial system.  This includes, but is not limited to:

• requiring banks to provide ultra transparency and disclose on an ongoing basis their current global asset, liability and off-balance sheet exposure details; and

• requiring structured finance securities to provide observable event based reporting under which any activity like a payment or default involving the underlying collateral is reported before the beginning of the next business day.

Regular readers also know that this data should be made available through a data warehouse hosting what your humble blogger calls the "Mother of All Financial Databases".

In addition, regular readers know that this data warehouse should be coordinated by a firm with proven expertise in transparency and that is free of all conflicts of interest with existing market participants.  Structured finance showed the perils of allowing firms with conflicts of interest to be involved in ownership, oversight and management of a data warehouse that was suppose to bring transparency to the market.

The focus of the coordinator should be on optimizing transparency now and in the future.

The day to day operation of the data warehouse can be run by one of a number of global data management companies.