4 ms·

Mainly was LIBOR used in the EuroDollar market? Anyways, it seems like there is a need for a system that is transparent, immutable, and accessible to everyone.

Mainly was LIBOR used in the EuroDollar market? Anyways, it seems like there is a need for a system that is transparent, immutable, and accessible to everyone... Crypto? Matt Damon is calling. Cheers

Hjfrf 5y ago
I worked at a European bank ten years ago, and libor was at least one leg of effectively every product offered. Interest rate swaps, credit, loans, fixed income, exotic derivatives, CDO, whatever. You have to hedge the interest rate risk somewhere or get stuck with huge collateral requirements/XVA. Cryptocurrencies don't solve the problem since they're largely traded on opaque exchanges and other l2 solutions even less trustworthy than the libor cartel.
- csdvrx 5y ago
  I think the parent poster meant that the actual going prices on multiple exchanges could be used for data inference. While there are rumors of wash tradings on some exchanges, the price at which such trades would be going will be constrained by the larger network, and the risk of triangular trade will limit the possible divergences to a larger spread (instead of going one direction only) Add enough data, and you may get something that would be almost impossible to trick, simply due to the sheer number of exchanges, and bots that would gladly take the money of those who would try to rig the game.
  - erosenbe0 5y ago
    Ummm the whole point is that it is a measure of relatively unregulated dollar for dollar transactions not subject to any clearinghouse, exchange, or blockchain regulation or visibility. LIBOR is supposed to be the benchmark of dollars anywhere, so to speak. So you're talking about apples and oranges
    - csdvrx 5y ago
      Well, you do with what you have (and the prices of apples may be correlated enough with the price of oranges to act as a proxy if you can't get the price of oranges), and the pros of "resilient to rigging" might be worth more than the cons.
      - erosenbe0 5y ago
        I agree with that. More information and less rigging is a more efficient market, which is a win-win for nearly everyone. Maybe the big players could agree to record a decent portion of the transactions transparently across a clearinghouse or blockchain that would be audited manually or cryptographically. Then you have real-time approximation of rates.

Mainly was LIBOR used in the EuroDollar market? Anyways, it seems like there is a need for a system that is transparent, immutable, and accessible to everyone... Crypto? Matt Damon is calling. Cheers

Hjfrf 5y ago

I worked at a European bank ten years ago, and libor was at least one leg of effectively every product offered. Interest rate swaps, credit, loans, fixed income, exotic derivatives, CDO, whatever. You have to hedge the interest rate risk somewhere or get stuck with huge collateral requirements/XVA. Cryptocurrencies don't solve the problem since they're largely traded on opaque exchanges and other l2 solutions even less trustworthy than the libor cartel.

csdvrx 5y ago
I think the parent poster meant that the actual going prices on multiple exchanges could be used for data inference. While there are rumors of wash tradings on some exchanges, the price at which such trades would be going will be constrained by the larger network, and the risk of triangular trade will limit the possible divergences to a larger spread (instead of going one direction only) Add enough data, and you may get something that would be almost impossible to trick, simply due to the sheer number of exchanges, and bots that would gladly take the money of those who would try to rig the game.
- erosenbe0 5y ago
  Ummm the whole point is that it is a measure of relatively unregulated dollar for dollar transactions not subject to any clearinghouse, exchange, or blockchain regulation or visibility. LIBOR is supposed to be the benchmark of dollars anywhere, so to speak. So you're talking about apples and oranges
  - csdvrx 5y ago
    Well, you do with what you have (and the prices of apples may be correlated enough with the price of oranges to act as a proxy if you can't get the price of oranges), and the pros of "resilient to rigging" might be worth more than the cons.
    - erosenbe0 5y ago
      I agree with that. More information and less rigging is a more efficient market, which is a win-win for nearly everyone. Maybe the big players could agree to record a decent portion of the transactions transparently across a clearinghouse or blockchain that would be audited manually or cryptographically. Then you have real-time approximation of rates.