It is supposed to be constructed using banks' own honest estimates of what it costs for them to borrow money. But regulators around the world suspect that li-bor (the London inter-bank offered rate), a financial benchmark that is set every day by collating these estimates, has been subject to manipulation. Little information has been publicly released by the regulators that are investigating. But Canadian and American legal documents seen by The Economist paint a picture of what is alleged. It is not pretty. Suspicions that something was wrong with libor were aroused in 2008 when financial risks began to pick up but the benchmark, which ought to have ticked upwards too, did not move.
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