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Morning papers: FSA suggests Libor should be scrapped

The morning papers brought to you by Investment Adviser: Friday August 10 2012.

By John Kenchington | Published Aug 10, 2012 | comments

The City watchdog will on Friday fire the starting shot on a dramatic overhaul of key benchmark borrowing rates with a package of proposals designed to restore trust following the recent Libor scandal, reports the Financial Times.

Martin Wheatley, who heads conduct regulation for the Financial Services Authority and has been asked by the government to review Libor, will say the existing structure and governance of the rate is “no longer fit for purpose” and must be fixed.

His suggestions for reform include scrapping Libor altogether and replacing it with a borrowing rate based on actual trades, which could be overseen by a new independent body rather than the British Bankers’ Association.

Corn and oil among top assets in crisis

The best-performing investments in the five years since the financial crisis began in earnest have been precious metals, oil, the bonds of the world’s most creditworthy governments and – most of all – corn, reports the Financial Times.

BNP Paribas’s move to halt withdrawals from three money market funds, on August 8 2007, heralded the onset of the credit crunch. The subsequent half-decade has seen an investor exodus from riskier assets and money gushing into “real” assets and safer bonds.

Sir David Walker to succeed Marcus Agius as Barclays chairman

Sir David Walker has been appointed the new chairman of Barclays. The author of the Walker review of banking and the former chairman of Morgan Stanley International, he will replace Marcus Agius at the beginning of November, reports The Telegraph.

Sir David’s appointment comes as the bank is still reeling from the Libor scandal that led to resignation of three senior Barclays directors including Mr Agius.

George Osborne calls Tim Geithner to demand “fair treatment” of Standard Chartered

George Osborne has intervened in the escalating row over Standard Chartered with three calls to the US Treasury Secretary in which he demanded “fair treatment of British businesses” by US regulators.

The Chancellor told Tim Geithner he would not impede any investigation but that he had been “very concerned about the way” in which New York’s Benjamin Lawsky had sprung his explosive order on Monday.

Deepening Euro crisis could force Britain out of the EU for ever, says leading investment bank

The deepening crisis in the eurozone could see Britain quit the European Union for good, according to one of the world’s leading investment banks, reports the Daily Mail.

Japanese giant Nomura said the UK government could be forced to set a date for an in-out referendum as soon as the autumn as the single currency bloc lurches closer to disaster.

Export slump sets back recovery hopes

A dramatic export collapse left the UK with a huge £10.1bn goods trade gap in June, dealing a blow to the Bank of England’s hopes for a rebalancing of the economy, reports The Independent.

The gloomy figures follow Governor Sir Mervyn King’s warning this week that efforts to shift the nation towards exports and investment “will require patience”.

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