Djukic: LIBOR to be Cancelled Due to Lack of Trust

The reason for the LIBOR no longer being published beginning with the last day of this year is that the participants in the financial market no longer trust the LIBOR as a reference after the world financial crisis of 2008 and due to the fundamental defect of its being determined based on the banks’ quotations, and not based on the realized transactions.

In the latest issue of Magazin Biznis, these reasons are explained by Djordje Djukic, a professor at the Faculty of Economics in Belgrade, who, having in mind the importance of that event and the preparations that need to be done in the Serbian banking market, has done a study for the Association of Serbian Banks (UBS).

He points out that, due to said defect, the LIBOR might have been subject to manipulation by the biggest banks in the world for a long time and that these manipulations might have helped them project a better credit rating or improve their tradition position.

When asked what the cancellation of the LIBOR means for banks in Serbia, Djukic says that the study provides an analytical basis for an active inclusion of UBS in the adaptation of the local banking regulations and the preparation of the members of UBS to inform their clients of the exact nature of the changes on time.

– Not just because of the already signed loan agreements, but for new agreements as well, where new interest rates will apply. This is even more important because the process of the extension of the already given recommendations of international associations and bodies, regulatory bodies and national work groups for switching to non-risk referential rates continues even after the completion of the study – Djukic said.

Ekonomski fakultet Beograd

Udruženje banaka Srbije

Faculty of Economics in Belgrade

Association of Serbian Banks

UBS

Đorđe Đukić

LIBOR

referential rate

manipulation with LIBOR