Why is Libor so important?

The Financial Services Authority (FSA) says Libor and Euribor are "benchmark reference rates fundamental to the operation of both UK and international financial markets".

The prices of trillions of pounds worth of financial transactions around the world are set according to Libor. Among them, financial swap deals worth £225tn are indexed to Libor, and loans totalling £6.4tn, the British Bankers' Association says.

Does Libor affect my mortgage?

Some mortgages are directly linked to the Libor rate. But even for those that aren't, it is used by banks to help them set the interest rates that they charge some of their own mortgage or loan customers.

The Libor rate is vital because it is followed far more closely by the banks than the interest rates set by the Bank of England, because the Libor rate is a far more accurate appraisal of real world circumstances.

What happened at Barclays?

Staff at Barclays filed misleading figures for interbank borrowings they made.

Firstly, between 2005 and 2008 - and sometimes working with traders at other banks - they tried to influence the Libor rate - so as to try to boost their profits.

Then between 2007 and 2009, at the peak of the global banking crisis, Barclays filed artificially low figures. This was to try to hide the level to which Barclays was under financial stress.

How could the actions of Barclays' traders affect me?

As already discussed, the Libor rate is determined from the banks telling the British Bankers' Association their own interbank lending rates. It goes into a pot with figures from other banks to work out the daily rate.

Any change in that main rate could feed through the financial system to make loans, mortgages or credit card interest rates more expensive, or cheaper.

One economist stated today that 5 billion people were affected by this rigging of Libor rates

And they didn't do it alone!