The LIBOR scandal

One of the most important and crucial interest rates in finance, the LIBOR (London Interbank Offered Rate) has recently been involved in a very serious scandal that has shocked many beyond the financial world. Many billions worth of financial contracts (approx. 800 trillion) rest upon the London interbank lending rate, and therefore it has become so shocking.
The LIBOR is regulated every day by a group of leading worldwide banks, and takes into account the currency rates of 10 different currencies and as well the rate for 15 different lengths of loans (from overnight to 12 months). However the most important is the 3-month US dollar LIBOR. Banks use these rates in order to establish the interest for three months dollar loan to other banks.
The LIBOR is published daily at 11:30 am (London time) by Thomson Reuters. It measures the cost of funds to large global banks operating in London financial markets. Each day, the BBA ( British Bankers' Association) asks a group of 18 major global banks the following question: “At what rate could you borrow funds, if you wanted to ask and accept a inter-bank offer in a reasonable market size just prior to 11 am?” The highest 4 and lowest 4 responses are excluded, and the average of the remaining 10 is calculated. There are separate LIBOR rates for all 15 different maturities (from 1 day to 1 year) for each of 10 currencies.
However, because these rates submitted by global banks are only estimations, and not real transactions, the numbers may not represent the reality. Traders would influence their colleagues to submit fictitious rates that would be higher or lower than their actual estimates. And because the LIBOR is made from an average, it would be pushed up or down.
And that was the how the English bank Barclays got involved with this scandal, further undermining and eroding trust towards the