Is it possible to stop the greed?

The Libor-rigging scandal involving the British banking giant Barclays is still unfolding. Recent probes indicate that Barclays was manipulating Libor rates in its favor between 2005 and 2009. The scandal brought down the chairman, the CEO and other senior executives of Barclays, but this was not enough to quell public anger towards banks and greedy bankers.

Greed is the original sin of the financial sector, which is replete with different scandals, especially during the height of the financial crisis. Yet this Libor scandal continues to grip public attention.

I believe this is because we are simply too shocked.

First, we didn't expect that Libor could have been manipulated. The Libor rate is used as a benchmark for trillions of dollars' worth of loans, mortgages and derivatives traded around the world. If Libor can be manipulated, then what can't be?

Second, we didn't expect that so many banks were involved. The scandal has hit not only Barclays but also more than 20 other banks, including Citigroup, JPMorgan Chase, Deutsche Bank, HSBC and RBS, all of them giants that are "too big to fail".

Third, we didn't expect there would be government involvement. An internal Barclays memo shows that in October 2008, the Bank of England (The UK's central bank) hinted that Barclays should lower its Libor-rate submission in order to improve financial-market liquidity. Bank of England Governor Mervyn King denies everything, but who cares? Economists, officials, think-tank researchers and media analysts are discussing what to do with Libor in the future. It is generally agreed that urgent reform and stricter regulation are needed:

1. Participation in the setting of Libor should be more representative and better regulated by authorities.

2. The role of central banks should be strengthened.

3. Libor could be scrapped altogether and replaced with an interest rate that is set using actual trades.

4. The monopoly of large banks needs to be broken.

5. Retail and wholesale banking need to be separated.

6. Harsher punishment should be handed down on those who break the rules. It's all easier said than done because financial regulators in Europe and US always beat around the bushes. Most likely, this scandal will again wrap up with a fine and nothing more. That was the case after US regulators caught UBS rigging Libor in March 2008.

China is also a victim of the Libor-rigging scandal. In a globalized world, no one is immune.

Maybe it's naive to expect that we can vanquish the banking greed or dismantle the Western chokehold on financial business. Yet the scandal creates a great opportunity to push for "global governance" instead of "Western governance" in the financial sector.

The author is a Beijing-based scholar of international relations.