The Financial Stability Board chief Mark Carney said Tuesday that global regulators will set up a special task force with banks to repair or replace benchmarks amid several rate-rigging scandals including Libor. Mark Carney is going to be the next Bank of England governor.

Financial Stability Board

The Financial Stability Board has already hired Federal Reserve Governor Jeremy Stein and the U.K.’s Financial Conduct Authority chief Martin Wheatley to lead the probe into interest rate benchmarks, reports Emma Thomasson of Reuters. Carney said the task force will review different options for benchmark rates that also meet the needs of private sector. He also warned that even transaction-based benchmarks can be manipulated.

CFTC Wants Libor To Be Trashed

Regulators have slapped a fine of more than $2.5 billion on Barclays PLC (NYSE:BCS) (LON:BARC), UBS AG  (NYSE:UBS) and Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) for distorting the London Interbank Offered Rate, a benchmark rate which is used as a basis to price products worth more than $300 trillion. More than a dozen financial institutions are still under investigation across the globe. After the Libor scandal, there have also been oil price rigging and Forex rate rigging scandals where investigations are still under process.

The U.S. Commodity Futures Trading Commission has stated that it wants Libor to be trashed. CFTC proposed a reference rate that will be based on actual market transactions. Carney said the task force will consist of a market participants group, and will present its findings by the middle of 2014. Market participants will analyse benchmark rates and make suggestions for alternatives.

Financial Stability Board to Examine Transition Issues

The Financial Stability Board will also examine if there are any transition issues between rates, and whether benchmarks and their proposed alternatives meet international standards. The move will make benchmark setting regulations tougher. The International Organization of Securities Commissions is also working to reform benchmark setting principles.

The FSB said it will come up with ways to strengthen the solvency of globally systemically important insurance, and publish a report next month. Carney praised the ECB’s initiative to analyze the balance sheets of major banks to bolster the European banking system. Speaking of China, Mark Carney said that the credit crunch in Asia’s largest economy is under control of the authorities now. The People’s Bank of China said Tuesday that it would  manage market rates to reasonable levels.