FRANKFURT The system of setting benchmark interbank lending rates, or Libor, can be reformed by tightening requirements for reporting and documenting data, Bundesbank Vice President Sabine Lautenschlaeger told a German newspaper.
The Bundesbank's view contrasts with that of German regulator BaFin, which suggested that the system of setting rates may need to be replaced.
"The safeguards at financial institutions were inadequate. That must be ended, so that a scandal like this cannot be repeated," Lautenschlaeger told the Handelsblatt newspaper in an interview on Tuesday.
The interest rate scandal broke when British bank Barclays was fined $450 million (285 million pounds) by UK and U.S. authorities last June over interest rate-rigging allegations.
More than a dozen banks are now under investigation by authorities in Europe, Japan and the United States over the suspected rigging of Libor - the London Interbank Offered Rate - used to price financial instruments worth trillions of dollars globally.
Lautenschlaeger said that because the potential for manipulation of Libor and the Euro interbank offered rate (Euribor) was not adequately identified in the past, not enough attention was paid to making the rate-setting process safer.
She said investigations at some banks in Germany had been completed, but declined to provide names.
Deutsche Bank, the country's biggest lender, is being investigated for potential manipulation of Libor. Last week said it had increased its litigation reserves to 1.8 billion euros (1.5 billion pounds) from 800 million.
Separately, Lautenschlaeger said the finance industry should seek to ensure that "absurd bonuses" are not paid to bankers.
Lautenschlaeger said she would prefer a retention period of five years or more for large bonuses, but said any rules would need to be applied internationally to prevent German banks from suffering a competitive disadvantage.
(Reporting By Edward Taylor. Editing by Jane Merriman)
Our top photos from the past week.