LIBOR governs the price of more than 500 trillion US dollars worth of loans and transactions around the world, including household mortgages.
So when Barclays was fined hundreds of millions of pounds for trying to rig the London Interbank Offered Rate interest in the rate spread far beyond the trading floor.
And in the wake of the scandal lawmakers are pressing ahead with far-reaching reforms which will make it a criminal offence to manipulate rates such as Libor.
Barclays was fined 290 million pounds for manipulating Libor in June, sending shockwaves throughout the banking industry.
A number of traders were found to have rigged rates to boost profits and bonus rewards, while the bank was also accused of lowering submissions in a bid to alter the perception of the lender's finances.
The claims ultimately led to the resignation of Barclays boss Bob Diamond, sparked a criminal investigation and became the focal point of a bitter row in Westminster over ethics in the banking sector.
Libor is considered one of the most important figures in finance, governing the rates at which banks are prepared to lend to each other in the wholesale money markets.
Financial Services Authority (FSA) managing director Martin Wheatley reviewed the Libor system and produced a 10-point plan to stamp out rate manipulation.
And Financial Secretary to the Treasury Greg Clark said Wheatley's recommendations would be accepted in full, including ditching the British Bankers' Association (BBA) as the group in charge of running Libor.
A new administrator is now being sought to run Libor in place of the BBA, while a code of practice will also be drawn up for banks submitting lending rates.
The BBA came under heavy criticism for being "careless" and having "clearly failed" in overseeing Libor, the Wheatley review said.
The lasting impact of Libor on banks and wider financial stability is likely to be felt for some time.
The Bank of England's Financial Policy Committee (FPC) recently said lenders were understating the amount of capital they held to protect against future financial shocks by not fully recognising the impact of past failures, including Libor manipulation.
The FSA is as a result expected to start immediately asking banks to increase their capital buffers, which act as a cushion against shocks in the financial system and future crises.
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