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Australia to implement new interbank rate system

Australia is to become the first major global economy to scrap its benchmark interbank borrowing rate, it has emerged.

In the aftermath of the worldwide Libor-manipulation scandal, regulators are overseeing a mass overhaul of individual nations' systems in order to make sure there is no repeat of the issues that occurred with the London rate.

The Australian Financial Markets Association (AFMA) has today (27 March) unveiled sweeping changes to the way in which the Bank Bill Swap Reference Rate is set.

For instance, the AFMA will no longer rely on a panel of banks to provide information and advice on the figure. Instead, it will now be compiled by directly using prices from electronic markets and brokers.

The body added that Citigroup and HSBC will stop making contributions to the rate as of the beginning of next month.

Rick Moscati, treasurer at the Australia & New Zealand Banking Group, told Bloomberg his organisation "broadly supports" this "positive step".

By Gary Cooper