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Whats the relationship between 2008 Credit crunch, Barclayss scandal? Why LIBOR has biggest impact in banking industry?|

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LIBOR is a reference rate used by many banks and countries for credit purposes. Most of the trade agreements, especially inter-country trades are made using LIBOR as a reference. It is used across five currencies. Hence, LIBOR has a big impact in the banking industry.

Barclays' scandal was based on producing fraudulent LIBOR rates by banks and financial institutions. Due to the fudged rates used by banks to cover their traders' positions so that they booked profits, the banks financial position appeared in a better position than they actually were as LIBOR is an indicator of financial health. This led to banks lending more than they should have which led to the 2008 credit crunch.

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