At the peak of the pandemic-induced market meltdown, guesswork played a vital role in setting international borrowing costs.
Transactional data used to calculate sterling LIBOR all but vanished as markets became volatile in March, reinforcing the case for abandoning the benchmark, Bank of England Governor Andrew Bailey said in a speech on Monday.
To set LIBOR, which underpins hundreds of trillions of dollars in assets around the world, banks submit market data, or—when these numbers are lacking—use their own estimates to inform submissions. That process has prompted questions about the benchmark's accuracy and helped fuel a years-long push to replace it.
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