UK bank scandal must be 'looked into': Pagrotsky

The Libor scandal in London may have caused economic damages for Swedish tax-funded businesses, and ought to be looked into, said the Social Democrats’ tax investigator Leif Pagrotsky.

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Pagrotsky called the Libor-rate an “international benchmark” with effects spreading far beyond London, reported the newspaper Svenska Dagbladet.

A scandal of Liborgate’s magnitude threatens to affect the public’s confidence in the entire market and the bank system globally, including Swedish banks, he emphasized.

Annika Falkengren, CEO of Swedish bank SEB, is also concerned of what effect the Libor scandal may have on the banking system.

“It’s devastating as a bank manager,” she said to Svenska Dagbladet.

Falkengren was unable to guarantee that interest rate manipulation could not occur in Sweden.

“That’s really hard to guarantee. However, the Swedish Stibor market is far smaller. But it’s in the industry’s interest to help clean up,” she said.

On their own initiative starting a few years ago, Swedish banks have been looking into how to make the Stibor rate, the Swedish equivalent of Libor, more transparent.

The Stibor rate is the interest rate that Swedish banks give each other.

Sweden’s Riksbank recently concluded in its stability report that the Swedish Stibor rate is functioning well, Falkengren noted.