Until now.
The rate sets the scene for banks, international financiers, mortgage lenders, credit card companies, or anyone wanting to raise funds through the interest rate markets.
A raft of financial instruments, worth hundreds of trillions of United States dollars, are tied to Libor.
In June, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the Libor scandal.
US and British regulators have already fined Barclays US$453 million ($560 million) for submitting false information between 2005 and 2009 to keep Libor low.
Barclays has admitted that it submitted figures that were lower than accurate for its interbank borrowing, making it appear healthier than it was.
Seven banks, including HSBC and Royal Bank of Scotland, are to be questioned in the US for alleged manipulation of the rate.
Barclays, Citigroup, Deutsche Bank, JPMorgan and UBS have also received subpoenas from the state attorneys-general of New York and Connecticut.
For borrowers and lenders the world over, Libor is the benchmark to be measured against.
In most cases, borrowers will have paid a premium over Libor for their money.
But with the integrity of Libor now in doubt, it has called into question interest rates paid by borrowers in Britain and on the international finance markets.
Paul Dowling, principal analyst at Sydney-based banking consultancy East and Partners, said markets were trying to get a fix on what the fallout would be.
"It's an absolute mess for Europe and a pretty big mess for the US," Dowling said.
"A number of class actions are building in the US to have a crack at the banks that have indulged in this behaviour and there are some pretty serious questions being asked of the Bank of England about their role.
"You've got years and years of money flows that have been substantially hinged off Libor," Dowling said.
"It's another one of those building blocks for the global financial system that has gone through a hell of a shock and which now needs to be re-engineered somehow."
The scandal has also flowed through to Libor's European cousin, Euribor, which functions along similar lines.
In New Zealand and Australia, interbank market rates are based on actual trades, while Libor is based on estimates.
The New Zealand system runs under the auspices of the NZ Financial Markets Association (NZFMA), which devised it.
NZFMA chief executive Paul Atmore said no system was ever completely foolproof, but the chances of a Libor-type scandal happening in New Zealand were "extremely remote".
"The systems we have in place make it very, very difficult for a bank to gain a reference rate because it's based on a transactional trading window," Atmore says.
"We are ahead of everyone else in terms of the process, and the transparency of the process."
The European Central Bank has been asking questions of banking associations around the world about how their individual interbank markets are managed.
Atmore said the ECB had expressed an interest in the New Zealand system, which has been specifically built to produce the interbank rates here.
"In terms of the governance process, it came about from a desire to ensure that we had the most accurate mechanism to reflect interbank lending rates and to ensure that we are squeaky clean," Atmore said.
East and Partner's Dowling said the New Zealand and Australian systems were based on actual trades between the banks.
"The kind of honesty-based, handshake arrangement just does not happen in these two [Australian and New Zealand] markets," Dowling said.
"It is a current rate and, as a result, it is not open to the kinds of manipulation that we have seen out of London, which is frankly based on little more than a promise."
Bank of New Zealand treasurer Tim Main said New Zealand was ahead of the game in terms of the transparency of its interbank market.
"Honestly, for a country like us, and indeed Australia, I think we are miles ahead of where the Europeans are in relation to the way the interbank rates are set locally," Main said. "I think we are very fortunate in having a very transparent, effective rate setting process."
Main said there appeared to be no noticeable shift in investor sentiment since the Barclays incident and that financial markets had continued to function. "Prices must be made and investors and issuers must have confidence in the price being set."
The Libor scandal looks likely to become a legal minefield, according to the Economist.
"With Barclays having acknowledged guilt already in a settlement with regulators, and other large banks expected to follow in the near future, a big legal barrier has already been breached," the Economist said. "And since Libor was ubiquitous, the potential group of plaintiffs is vast."
The full impact of the Libor scandal is yet to play out, but given the problems experienced since the onset of the global financial crisis, it's one the world's financial markets could well do without.
What it's all about
What are Libor and Euribor?
The London interbank offered rate (Libor) and the European interbank offered rate (Euribor) are benchmarks for short-term interest rates. They represent the interest at which banks will lend to each other for terms of from overnight to a year.
How do they work?
They are calculated by averaging quotes submitted by a selection of leading banks. Those quotes are the lowest perceived rates at which each could obtain funding from the relevant interbank bank money market for a given maturity and currency. Unlike their New Zealand and Australian equivalents, the rates are not necessarily based on actual transactions.
Why are they important?
Libor and Euribor form the basis of how borrowing and lending are conducted around the world. Major financing deals are often expressed in terms of the number of basis points above or below Libor or Euribor. They are important benchmarks for the cost of money in the international marketplace.
What happened?
In June, Barclays Bank announced a settlement with British and United States regulators investigating interbank rates, including Libor and Euribor. Barclays agreed to pay penalties of more than half a billion dollars. Barclays' chairman and chief executive resigned. The British Government has convened a parliamentary committee to examine professional standards.
BKBM - what is it?
New Zealand and Australian markets operate similar interbank systems, which are based on banks backing their rates with actual trades. In New Zealand, the system is called BKBM - named after the Reuters page on which the rates appear. In New Zealand, a two-minute trading window is opened daily at 10.30am. Contributing banks must quote rates that are actually traded during that window. In New Zealand, banks look to BKBM to cost their lending - from home mortgages to corporate lending.
