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It would be difficult to overstate the potential impact and importance of the latest banking scandal.
The paradox is that this episode may prove to be the moment that public anger reaches boiling point, for the manipulation of Libor, arguably, has less direct impact on taxpayers than much we have experienced since the financial crisis began.
The greatest damage here could prove – and as you might imagine I say this with the heaviest of hearts – to be to the City of London’s position as a highly trusted worldwide financial centre.
For key City institutions to be seen as manipulating the Libor is akin to debasing one’s national currency – consider the sheer number of financial instruments traded in the City of London each and every minute of the day, whose price is set by reference to Libor.
I realise that this will very likely lead to a feeding frenzy of class-action litigation, most likely originating in the US, but more importantly still risks doing lasting reputational damage to the City of London. It is, therefore, imperative the appropriate authorities get to the bottom of this fast. Our economy will remain massively dependent on financial services. There is no comparable sector to provide jobs or earnings to anywhere near the same extent.
It is of overriding importance to restore trust if the City of London is to survive as the world’s pre-eminent global financial centre.