Because of limited interbank lending activity, Mr. Wheatley said, sometimes the rates would have to be based on a level of judgment from banks on what interest rates they would be able to secure from other firms.
The Treasury Business segment covers interbank and capital market activities and proprietary trading.
"Policy makers have taken measures to slow the rapid growth in credit and at the same time tightened rules about irregular and imprudent activity in the financial system, including interbank bond repo transactions," economists at JPMorgan in Hong Kong wrote in a research note Friday, referring to bond repurchases.
REUTERS In Libor Inquiry, Spotlight on Higher-Ups | Authorities in the United States and Britain "want to know whether senior executives knew of, or participated in, illegal activity" surrounding the manipulation of the London interbank offered rate, The Wall Street Journal reports.
Authorities are also looking into the activity surrounding similar benchmarks known as Tibor, the Tokyo interbank offered rate, and Euribor.
In 2008, a Barclays employee told the authority that the bank was lowering its submissions for the London interbank offered rate, or Libor, although Barclays never specifically said the activities amounted to manipulation.
"Interbank loans were funded by money that originated from the drugs trade and other illegal activities," he said.
That's how interbank loans came to be systematically financed with money from drug trafficking and other illicit activities.
In a number of recent scandals, including the attempted manipulation of the London interbank offered rate, or Libor, top executives at some of Britain's leading banks denied knowing that the activities had taken place.
Along with the $1.5 billion fine connected to the manipulation of the London interbank offered rate, or Libor, UBS had billions of dollars of losses during the financial crisis because of risky trading activity.
