The integrity of the Libor rate is fundamental to the financial system, a British court has heard.

Saul Haydon Rowe, an expert in banking and trading, said “just about everyone” has some sensitivity to the benchmark rate.

He was giving evidence at the trial of Tom Hayes, a trader accused of rigging the rate.

The 35-year-old is accused of orchestrating a scheme to manipulate Libor in an enormous fraud.

Mr Haydon Rowe, when asked how important the Libor system was, told the jury at Southwark Crown Court: "It's critical. Just about every trading group will have a sensitivity to Libor, and that's just in the banks.

“Just about everyone has some sensitivity to Libor, if you look deep inside their financial world.”

Confidence

Asked how important the integrity of the system was, he said: “It is fundamental to the financial system, because Libor is the rate at which borrowers, lenders and other financial counter-parties balance out their cashflows.

“If not, you lose confidence in the system, because Libor has been moved from where it should be set.”

Mr Hayes denies eight counts of conspiracy to defraud covering a period from 2006 to 2010, when he worked for Switzerland's UBS and the US's Citigroup.

He joined UBS in 2006 as a trader in Tokyo and Citi in 2009, but was sacked after his methods were formally reported to senior management.

He returned to the UK, where he was arrested in December 2012 and questioned by the serious fraud office.

He was a trader in yen Libor derivatives, effectively betting on movements of the daily rate at which banks were able to borrow from each other.

The case centres on the allegation that he was seeking to rig the submissions made by the panel banks, used to calculate the rate. – (Reuters)