Federal Reserve Chairman Ben S. Bernanke said a number of market rates could replace the London interbank offered rate as a benchmark for lending rates.
There “still are problems with the current Libor system,” Bernanke told the House Financial Service Committee today in Washington during his semi-annual testimony to Congress. The index “doesn’t reflect actual market transactions.”
“One strategy would be to switch to a market-based indicator,” he said. Bernanke declined to endorse a specific rate, though he said possibilities include “repo rates, the OIS index, even potentially Treasury bill rates.” He was referring to the overnight indexed swap rate.