Boggling doesn't begin to describe the systemic effects of 'managing' the interbank rate in what is supposed to be an advanced capitalist market economy. The redistributive effects are unquantifiable and unlimited in every market. Contracts geared to LIBOR? Globally? Expectations in financial transactions falsely based?
An 'independent' central bank that seems to have been making calls co-ordinating rates? Under pressure from Whitehall 'figures' (read politicians, not civil servants). A point blank, full denial from the then Chancellor of the Exchequer that this pressure was coming from him or from the Treasury; not just 'not me not us' but the use of the word 'unthinkable'.
A Cabinet Office 'figure' (political appointee) who circulates a paper on the desirability of a lower LIBOR and whose spokesperson uses merely 'does not recall' in reference to actions in all this? The central bank that refuses any comment at all?
The media reports that LIBOR had been manipulated in two phases: 2005-2007 upwards (that would give more private profits) and 2008 onwards downwards (that would help the economy in its awful place). So first it's practised for private profit without intervention by regulatory authorities - this is what they meant by 'lightly regulated?, and then it's required by the Executive in office with the active intervention of the 'independent' central bank.
While it is perfectly acceptable, indeed the responsibility of a central bank to set the bank rate, and use any other available instruments to influence market rates, these instruments do not include direct orders. We might as well have been in a communist centrally-planned economy - in Poland before The Fall is a good model; (even there the Polish central bank had been made genuinely independent in 1987.)
Now who was senior, not in the Treasury after 2007, running an alternative finance ministry within Whitehall after being thwarted in choice of Chancellor, believed in the managed (right down to the micro-managed) economy, boasted of light regulation when he was in the Treasury including 2005-7, and would have been blinded by Executive authoritarian attitudes to the ramifications and consequences of using central planning practices in the London financial sector?
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