According to an EC statement, the practice of manipulating benchmark rates, including LIBOR and EURIBOR, will now be added to insider dealing as criminal offences.
According to justice commissioner Viviane Reding, the crackdown would put an end to criminal activity in the banking sector.
“Public confidence has taken a nosedive with the latest scandals about serious manipulations of lending rates by banks,” Reding said.
“This is why we are today proposing EU-wide rules to tackle this type of market abuse and close any regulatory loopholes. A swift agreement on these proposals will help restore much needed confidence of the public and investors in this crucial sector of the economy,” she added.
Barclays was recently fined £290m by the FSA and the US Commodities Futures Trading Commission (CFTC) for manipulation of the LIBOR rate between 2005 and 2009.
The scandal led to a clear-out of senior management, including chairman Marcus Agius, chief operating officer Jerry del Missier and chief executive Bob Diamond.
A number of other banks and financial institutions are now facing investigation over the LIBOR scandal, including HSBC, JP Morgan Chase and the Royal Bank of Scotland.
