publication process, some of the submitting banks reportedly became concerned about reporting a rate that would suggest that they were being treated by the market as a greater counterparty credit risk than their peers. accordingly, some banks were alleged to have lowered their libor submission below their actual likely borrowing rate to avoid the stigma associated with posting a higher borrowing rate and the possibility that their funding costs could increase as a result. conflicts also reportedly abounded at the level of the individual submitters. again, these highlighted profound compliance problems at some of the submitting banks. as i noted earlier, the intent was that the expertise of the submitter would be insulated from any internal pressures by the informational barriers within the submitting banks. the hope was that these informational barriers separating the submitters from the traders were thick and impenetrable. the investigations into libor manipulation found that the reality was that they were often paper thin and porous. see darrell duffie and jeremy stein. “ reforming libor and other financial - market benchmarks. ” september 19, 2014. bis central bankers ’ speeches we have learned that false reporting and manipulative behavior was pervasive across firms and over time, took many forms and was often conducted in a nonchalant manner. this has been well - documented by the commodity futures trading commission in their published findings. for example, interest rate swap traders routinely asked colleagues to submit rates with an explicit goal to have the adjusted submission benefit the value of specific derivatives positions they held. as an illustration, investigations discovered that one “ senior yen trader ” directly or indirectly made at least 800 requests in writing on ubs ’ s email and chat systems to their submitter. 5 requests often had a casual matter of fact nature to them. to illustrate, an exchange in september 2007 from a trader at ubs to the submitter went as follows. 6 “ hi … could really do with a low 1m [ one month ] over the next few days as have 17. 5m [ million ] fixings if ok with you? ” submitting banks often facilitated this type of behavior – in some cases derivatives traders and submitters sat on the same desk, while in others the submitters were themselves traders, both circumstances obviously representing conflicts of interest. other investigations documented that traders at one bank would often shout across the trading desk to fellow traders to confirm that there were no conflicting requests before they sent their requests to their submitter. 7 the investigations also found that not only were

support of the fsb recommendations and our own efforts. first, the fsb recommendations make clear that there is not one single path for all jurisdictions to achieve the common objective of more robust and resilient reference rates. rather, each jurisdiction must take into account its own specific institutional, legal and market practices and arrive at its own best solution. in the u. s., i believe it is important to identify alternative reference rates that are grounded in a strong governance framework as laid out in the iosco principles and that are supported by market transactions. this brings me to my second point – given a set of robust reference rates that meet iosco standards, the choice among these reference rates should be left to market participants who can best identify the specific rate that is most appropriate for a specific business need. third, the federal reserve is committed to working with market participants of all kinds – dealers, end users, legal and accounting experts – to help develop robust reference rates that meet the needs of all types of market participants. in addition to these specific efforts around improving and finding alternative benchmarks, the new york fed is sponsoring other efforts related to the reform of market practices and benchmark rates. the foreign exchange committee ( fxc ) and treasury market practices group ( tmpg ), for example, are two groups of senior market practitioners sponsored by the new york fed that are working within their markets to identify best practices for trading and behavior related to benchmark rates. both groups also have published broader sets of best practices for the foreign exchange markets, and for treasury, agency debt and agency mbs markets. i would ask all market participants to ensure that these and other best practices guide the behavior that we should expect from participants in financial markets. this will not be easy, but i believe restoring confidence in reference rates is achievable and will greatly enhance the robustness and resilience of our financial system. i have focused here on the reform efforts around libor, which is only one reference rate, albeit one that is widely used and a core part of our financial system. but, the need for stronger governance and more accountability spreads much further within the set of benchmark rates, and further reforming major interest rate benchmarks, financial stability board. reforming u. s. dollar libor : the path forward, remarks by jerome h. powell at the money marketeers of new york university, september 4, 2014. bis central bankers ’ speeches to encompass a wide range of practices within the financial system