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British bank Barclays (LSE: BARC.L - news) is dead centre of a storm involving the manipulation of inter-bank lending rates, particularly Libor (the London Inter Bank Offered Rate).

What is truly breath-taking is the sheer scale of this fraud.

According to one estimate, around $350 trillion (£223 trillion) of lending and derivatives is priced off Libor. That’s enough to pay for the whole of UK Government spending for around three centuries at current levels. Thus, if misconduct by banks caused Libor to increase by a mere one tenth of one basis point (0.001%), this amounts to $35 billion (£22 billion) a year in extra interest – that’s roughly the UK’s annual budget for transport and close to as much as council tax brought in last year.

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