Here's What Went Wrong With Libor

The video discusses the importance and flaws of the Libor system, which influences interest rates on $300 trillion worth of securities. It highlights how the growth of derivatives led banks to manipulate Libor rates for profit and to appear creditworthy during the 2008 financial crisis. Regulatory investigations followed, resulting in significant fines for major financial institutions. The video concludes with the ongoing transition to a new rate system to replace Libor.

What is the significance of the Libor number in the financial system?

In what ways is the Libor system described as being structurally flawed?

How did the growth of derivatives in the 90s and 2000s affect banks' behavior regarding Libor submissions?

What were the consequences faced by financial institutions involved in the Libor scandal?

What changes did regulators implement in response to the issues with the Libor system?