LIBOR is calculated and published in accordance with a prescribed process based on rates submitted by multiple predetermined banks called panel banks. That mechanism has made LIBOR highly convenient and allowed it to be published for as many as 10 currencies at its peak.1 At that time, LIBOR was regarded as the de facto risk-free rate reflecting the prevailing market rates.
That was because, first, highly credible banks were selected as panel banks, and second, LIBOR panel banks were required to submit the funding rate of a prime bank (a bank with particularly high creditworthiness) judged by each panel bank rather than their own funding rates.