It undermines trust in one of the cornerstones of the world financial system. Just think that hundreds of trillions of euro of financial operations are based on the Libor and that in many countries all over the world people buy their homes with mortgages indexed to the Libor.
We need regulatory capital standards that are far more risk sensitive than the one we have now and that provide the industry greater incentives to measure and manage risk. The IRB framework seems compatible with the efforts of best-practice banks and with the direction in which risk management seems to be heading.