The independent review into Libor has published a discussion paper.

In the paper, Martin Wheatley, head of the independent review set up by the Government into Libor, has set out initial proposals for reforming the current framework for setting and governing Libor.

The paper now seeks feedback from all stakeholders over a four week period and sets out initial analysis on:

the role that Libor play in financial markets;
the flaws in the current structure of setting Libor, its governance and oversight; and
a range of options for reform, including the issue of transition.

The discussion paper is open for consultation until 7 September. The independent review will report to the Cabinet Committee on Banking Reform, chaired by the Chancellor with the Secretary of State for Business, Innovation and Skills as Vice-Chair, by the end of the summer.

Any necessary legislative changes will be considered for inclusion in the Financial Services Bill or the Banking Reform Bill.

Wheatley said: “It is clear that regardless of the outcome of ongoing international investigations, trust in a vital part of the financial system has been badly damaged and timely action is needed to repair it.

“Today, we are taking the first step in this process by launching the Wheatley Review discussion paper, which seeks responses from a wide range of market experts and international stakeholders. This review aims to ensure that LIBOR is reformed in whichever way fully restores credibility and trust.”

Mark Hoban, Financial Secretary to the Treasury, added: “This discussion paper demonstrates that we will give regulators the powers they need to prevent the manipulation of key benchmark rates in the future.

“This review will report by the end of the summer in time for any necessary changes to be taken forward in legislation. The Government is also working with its international partners to inform the international work in this area and work towards a globally consistent solution.”