FRANKFURT The European Central Bank said on Friday that banks should not leave the panel that sets the Euribor bank-to-bank reference interest rates, saying such rates played key role for the implementation of its monetary policy.
The future of Euribor has been under scrutiny recently because of a string of pullouts by banks, including Rabobank RABN.UL and Citi (C.N), looking to protect themselves from any fallout from the benchmark price-fixing scandal.
"The Eurosystem strongly encourages banks to remain in, or join, the Euribor panel to prevent potential disruptions to the functioning of the financial markets while the regulatory framework is being refined," the ECB said in a statement.
It also said that it welcomed the EU Commission's intention to propose that banks could be compelled to submit systemically important reference rates.
Euribor and its larger counterpart Libor are Europe's key gauges of how much banks pay to borrow from their peers and are used to set the prices of swathes of financial products, from some mortgages to more complex derivatives.
They also are a key indicator of financial market tension. When the financial crisis hit in 2008, interbank rates soared as trust between banks crumbled.
(Reporting by Sakari Suoninen)