The Man Who Invented the World’s Most Important Number
When Minos Zombanakis devised Libor—the London interbank offered rate—half a century ago, he had no way of knowing it would star in one of history’s greatest financial scandals.
The product of a big survey and a little math, Libor helps set interest rates worldwide, affecting the price of more than $300 trillion in mortgages, loans, and derivatives. Despite its ubiquity, few outside the world of finance had heard of Libor until 2012, when regulators found that a dozen banks—Barclays, UBS, and Citigroup among them—had colluded to manipulate the benchmark interest rate and fined them $9 billion. In this excerpt from The Fix (Wiley, December 2016), a forthcoming book about the Libor scandal, Bloomberg reporters Gavin Finch and Liam Vaughan trace the roots of this mysterious number.
In 1969, Neil Armstrong walked on the moon, Richard Nixon became president of the U.S., and 400,000 hippies descended on a sleepy New York farm near Woodstock. On the other side of the Atlantic, on a winter’s day in London, a mustachioed Greek banker named Minos Zombanakis was taking his own small step into history. He’d hit upon a novel way to lend large amounts of money to companies and countries that wanted to borrow dollars but would rather avoid the rigors of U.S. financial regulation.