EU official: 'rate fixing scandal is international

As reported on CNBC, Joaquín Almunia, EU Commissioner for Competition, said

The rate fixing scandal currently engulfing British bank Barclays will not stop at the UK’s borders but is likely to involve banks in a number of countries... 

His department launched an investigation last year into the practices of setting the Libor and Euribor – the European equivalent of Libor - rates. 

The City of London has received increased criticism following a number of high-profile scandals that have taken place there with suggestions that the City operates a unique culture that may well promote under-hand trading practices.

Actually, bankers have embraced opacity in the financial system on a global scale.  So there is no surprise that bad behavior is global.

“We established an anti-trust investigation last year. We had signals that some banks were developing collusive actions, illegal agreements according to competition rules and we started investigations about a group of banks not only British, other banks are also involved. 

We hope that at the end of our investigation we will complement the investigation that belongs with the competition authorities,” he said. 

The investigation is looking at whether there was a possible cartel in Euribor derivatives....

“It’s not an exclusive problem in the UK, unfortunately the financial crisis has shown that financial regulation was too weak but the UK markets are under the same regulations as the rest of the EU. 

It’s not a question of the UK or continental Europe, I think the whole [of] the financial activities were badly regulated and badly supervised,” he said. 

Financial regulation fails when it permits opacity in the financial system.  The direct consequence of allowing opacity is that the market can no longer exert discipline.